Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

CO-PARTNERSHIP SCHEMES

11.5 a.m.

Mr. Raymond Gower: I beg to move,
That this House is impressed by the social, industrial and economic benefits which accrue from co-partnership schemes, pension schemes and other similar schemes in industry; takes note of their extension in recent years; and urges the Government to take steps to equip itself with comprehensive information about them, and to consider how it can remove obstacles which may impede the introduction of suitable schemes, in appropriate industries and trades, on a wider scale.
I have three major objectives. First, I sincerely hope that, after careful and generous consideration of these important topics today, the House will deem it proper and desirable to accept this Motion. Second, I hope that I shall succeed in initiating a comprehensive discussion upon these subjects, which have attracted singularly little attention in the House in recent years, although they have been mooted and discussed in the country. Third, I hope that my hon. Friend the Parliamentary Secretary to the Ministry of Labour and National Service will be given the opportunity of telling us something of the official attitude towards these problems.
You might well complain, Mr. Speaker, at the inclusion in the wording of the Motion of the phrase
and other similar schemes in industry …
which phrase may be criticised for its vagueness. I am well aware of this, and feel that I must plead two reasons for its inclusion. At the time when, one afternoon, I suddenly learnt that I had had the good fortune to be successful in the Ballot, I was somewhat taken by surprise, and had to think quickly of a form of words that would not unduly limit our debate. Further, the House may understand me if I say that I feel quite unable to be dogmatic about these

matters. It is impossible for me to make sweeping statements about the relative merits of one kind of scheme or another.
In this, I differ from some propagandists in these matters. There are those who vehemently speak about the superior merits of co-partnership; there are others who insist upon the superiority of profit sharing. I have met others who are dubious about the worth of profit-sharing and of co-partnership but nevertheless see the obvious benefits of pension schemes, industrial schemes for life insurance, sickness benefits, and so on. I respectfully submit that all these kinds of schemes have their different values; and I am not now particularly concerned to decide which may be the most beneficial in industry.
I also wish to emphasise my view that a firm is not necessarily a good firm just because it has one or other of these schemes in operation. Rather would I regard these schemes as manifestations of the quality of a particular industrial organisation. Such an organisation should be progressive; it should be a good employer, in the broadest sense. It should pay good wages, and its products should be synonymous with quality. It should seek always to provide, at competitive costs, for the requirements of its customers.
In such a firm there should be a good relationship between directors, managers, and employees and ample facilities for joint consultation. The capital equipment and machinery should be maintained efficiently, the direction should be progressive in its attitude; there should be plenty of opportunities for promotion and prompt recognition of merit. There should also be a general spirit of camaraderie, if I may so describe it, and in such an organisation I should expect, or should not be surprised, to see the progressive introduction of the sort of schemes which we have under consideration today.
It is perhaps my duty to venture some definitions. Every hon. Member will easily recognise what we mean by works pensions schemes, salaried staffs pensions schemes, industrial insurance schemes, or sickness benefit arrangements and accident benefit schemes, which many companies have arranged not only for their employees, but also, in some cases, for their widows.
Some of us are acquainted with the sort of arrangement which obtains in Imperial Chemical Industries Ltd., whereby established employees are admitted to a special staff grade. In the case of I.C.I., I understand, all those who achieve the staff grade are guaranteed up to six months sick absence in any year, and there is also a prerequisite that they shall be entitled to a certain period of notice before their employment is terminated.
The terms profit-sharing and co-partnership probably need some definition, although I recognise that many hon. Members will know perfectly well what they mean. If I might, without presumption, shortly define profit-sharing, I would say that it applies in cases in which—and this is a general definition, which I have seen in many places—an employer agrees with his employees that they shall receive for their work, in addition to their wages, a share, fixed by definite arrangement beforehand, of the profits made by the undertaking to which the scheme applies. Co-partnership takes this a stage further. The worker accumulates his share of the profits in the capital of the business, and so becomes a shareholder in that business.
I recognise that this has been done in different organisations in different ways. I recognise too that profit-sharing has been carried out in a number of ways in different companies. The objects of co-partnership, as formulated by the Industrial Co-Partnership Association in 1884, are—and I quote—that workers
shall share to some extent in the profits, capital and control of the business in which they are employed.
It must be stressed that neither of these arrangements is a device for supplementing inadequate wages. The benefits are additional to the normal and proper wages in the particular industry. Both systems are related to the profits of the industry. Thus, I suppose, bonus payments and piece-work rates do not fall within these definitions. Indeed, I do not think they even fall within the rather general terms which I have used in my Motion in referring to "other similar schemes in industry," in the sense in which we are considering the matter today.
It is also particularly important that we should remember that in true profit-

sharing and co-partnership schemes the additional benefits must be arranged at least on a predetermined basis, and that that basis must be known all the parties concerned. Finally—and I think hon. Members will agree—none of these schemes—and I refer to co-partnership, profit-sharing, pensions schemes, sickness or injury benefit schemes, and even industrial schemes of life insurance—should provide or can provide an excuse for exploiting the consumer or the community.
I now revert to the terms of the Motion. It asks the House to say that it is
impressed by the social, industrial and economic benefits which accrue
from such schemes. I do not think we should fall into the danger of exaggerating these benefits, but I think I may be able to satisfy the House that they are significant and considerable. It is not that they inevitably convey obvious or tremendous pecuniary rewards, although, of course, in the cases of pensions, assurance, and sickness schemes, the advantages to an individual employee or his dependants may seem quite considerable and, indeed, significant.
On the other hand, in profit-sharing and co-partnership schemes, the rewards have often been relatively small in comparison with the wages incomes of the recipients. I think it is right to say that, when these schemes were fairly well established, by 1937, in many companies which practise co-partnership and profit-sharing, the figure of extra benefit seldom rose beyond about 6 or 7 per cent. of the normal income of the employee, so that, in those cases, perhaps generally, the pecuniary benefits were not always significant.
I would, however, like to remind the House that, in the case of the gas industry immediately prior to nationalisation—and I am not trying to make any political point, but merely to illustrate my argument—the actual pecuniary benefits of co-partnership were beginning to assume real significance. At that time about one-half of the capital in the gas industry in the United Kingdom was subject to co-partnership or profit-sharing schemes.
In the last complete pre-war year—1938—the value of the capital in 58 gas companies affected by such schemes was nearly £117 million, and more than


£400,000 was paid annually in bonus to about 50,000 employees who were entitled to participate. I understand, although I have not been able to obtain actual figures, that these amounts increased substantially on the eve of nationalisation.
Moreover, in the gas industry, there were committees of management elected by the employees, and accident, sickness, and superannuation funds, in the administration of which the employees played a notable part. As Professor J. H. Richardson said, in a lecture at the Royal Society of Arts on 28th April, 1947:
These are substantial material interests, but the moral values are even greater.
Perhaps at this stage we should resist the temptation of getting lost in the details of these fascinating subjects. I am particularly attracted to these schemes because they reflect a good relationship in the industrial organisations concerned; and because they tend to lessen the harshness of those frontiers which have often divided nations into employers and employed. I quote Professor E. Wight Bakke in a paper on the impact of human relations on production which was published last year by the Industrial Co-Partnership Association. He said:
In our political life, we have made great progress in developing democratic means by which the voice of the individual citizen can be heard, by which he can make his wants and his needs understood, and by which he can, through his representatives, have some degree of participation in determining the rules and regulations which govern him, and, indeed, have a significant part in determining the kind of policy and practice which is followed in his local and national government. In so doing, we have found a source of political strength and stability and adjustment to change unknown to more autocratic systems.
We can all agree with that, but have we done as much in industry, in the workshops, and in other places, where so many of our people spend such a great part of their lives? Cannot we find in these schemes, and in the atmosphere which they tend to engender, or from which, in some cases, they are engendered, a source of industrial strength and stability, and, indeed, to adapt the words I have just quoted, and adjustment to change unknown to some of our traditional industrial organisations.
I ask the indulgence of the House in quoting another extract from the same

paper of Professor Wight Bakke. He said:
We believe that the nation can be the strongest and most progressive which puts its trust in the enterprise and inventiveness, the skill and the wisdom of all its people, instead of depending on those qualities in a chosen few or in a self-appointed few.
In my respectful submission, anything which increases the interest of all the people working in an industrial organisation, and anything which augments their contribution of ideas and suggestions, or makes them feel an identity with their firm or company, or with any other organisation by which they are employed, is advantageous.
I wish to give an example of how all this works out in practice, and I can cite no more impressive example than the famous firm of Rowntree and Company Ltd. I am sure that hon. Members in all parts of the House have the highest regard and admiration for the standards set by Sir Seebohm Rowntree and his family for very many years. I will quote some words of Mr. W. Wallace, the Deputy-Chairman of Rowntree and Company Ltd., on 12th January, 1949. He said:
The day of mastership has gone, and efficiency can only be attained through leadership. But leadership is only possible under certain conditions. An employer is in a false position if it can be said, with even a grain of truth, that his aim in stimulating the energies of his employees is only to increase his own profits.
Mr. Wallace then proceeded to summarise the background to his own company's co-partnership scheme under a number of headings. I will mention just a few.
The first was:
We must seek to provide the means for a reasonable standard of material comfort.…
Under another heading, he said:
Not to pay anyone less than is sufficient to provide a reasonable level of subsistence.
Again:
To organise production to enable employees to earn a good, and, if possible, an excellent living out of what the consumer pays.
Under another heading, he said:
In addition, we have a comprehensive pension scheme, together with provision for widows' pensions.


Again:
We have had also for many years schemes, supplementary to State schemes, providing additional benefits for those who are sick or who become unemployed … We have sought to avoid paternalism, to found our relations with our employees on the recognition of the value of the individual, and of his right to be treated always as a unique personality.
Yet again:
As part of this aim, we have sought to base all appointments on merit, up to and including the Board of Directors.
Here are just two more quotations:
We have always given the fullest recognition to trade unions and to trade unionism. For over a quarter of a century, we have encouraged our employees to join their appropriate union.
And finally:
We have a system of works councils…The Central Works Council, with a majority of elected members, is our local Parliament …
After declaring that after thorough consideration his management had decided that management must remain with management Mr. Wallace stressed how carefully Rowntree's considered suggestions put forward by the works council. He then proceeded to describe the company's profit-sharing scheme which, in his words, should be regarded only as a part, though an important part, of the broader structure already described.
I have spoken about the Rowntree company in some detail because it seems to me to demonstrate most of the considerations which I had in mind when I made my introductory remarks. Co-partnership and profit-sharing have been tried and tested by a large number of concerns, not only in this country, but in France, the United States, and elsewhere. Some hon. Members may recall a statement made by the late Sir Clarence Bartholomew, the former Chairman of Bryant and May Ltd., a company which introduced co-partnership in 1919. He said:
There is no kind of business in which some form of co-partnership is not practicable, or in which it would not be beneficial.
Even if some hon. Members may not agree entirely with that, I think that all will agree that some form of profit-sharing and of co-partnership may be practised in a tremendous variety of industries and businesses today.
I should like to carry that statement a step further by saying that there are very few industries in which some form of pension scheme, of sickness benefits, of industrial assurance, or of other schemes, cannot be practised. Indeed, I have heard of a small grocery business with only four employees which has its co-partnership scheme. At the other end of the scale we have the great Beecham Group Ltd., presided over by Lord Dovercourt, who, as hon. Members will recall, until recently represented Harwich in this House. Its scheme last year yielded 8½ weeks' pay to its salary and wage earners. I am sure hon. Members will agree that that is quite a significant addition to a man's normal income.
To mention a different kind of industry, Vauxhall Motors have had a profit-sharing scheme since 1935. One can also think of I.C.I., to which I have already referred. It may be interesting to recall that Brunner Mond Ltd., one of the original companies, and a predecessor of I.C.I., actually started an elementary form of co-partnership very many years ago. We can note, too, that since 1929 I.C.I. has had its own savings bank, now containing deposits of more than £1 million. That is an example of yet another valuable industrial scheme to which I did not refer in my opening remarks.
We can note with pleasure the close association of at least three hon. Members of this House with the principle and practice of co-partnership. I refer to the hon. Member for Yardley (Mr. Usborne) who, through illness, is unfortunately unable to participate in this debate today. He is the chairman of a company which has a most generous scheme of co-partnership, including many of the other schemes to which I have referred.
I refer also to my hon. Friend the Member for Wallasey (Mr. Marples) whose book "The Road to Prosperity," published in 1947, was a valuable addition to the literature on this subject, and who, prior to his appointment as Parliamentary Secretary to the Ministry of Housing and Local Government, in 1951, practised what he preached in his own business. I would refer also to my right hon. Friend the Minister of Agriculture


who, prior to his Ministerial appointment, was Chairman of the Industrial Co-Partnership Association, and whose family business has maintained continuously for more than 42 years an honourable association with the ideal of co-partnership.
In my constituency, the Aberthaw and Bristol Channel Cement Company Ltd., have, since the recent war, progressed steadily in these matters. They have for a considerable time had a staff sickness and a works benefit fund scheme. In 1942, a staff pension and insurance scheme was added, and on 1st July, 1954, a works pension and life assurance scheme was instituted. Now a workmen's profit-sharing and dividend scheme has been added to the others. I understand that while both staff and workmen's pensions schemes are contributory, the company's annual contributions are on a much larger scale than those of the employees.
Recently, in Cardiff, where I reside, the progressive contracting firm of Edward Curran Engineering Ltd., has instituted life assurance and pension schemes for its works employees. The value of these schemes is indicated by a case which was recently brought to my notice. A man joined Curran's only in 1952, and he died in December last year. His widow received the lump sum of £300 under the life assurance scheme. Hon. Members will recognise what a benefit that was after only two to three years with the company. Another company which has a long association with South Wales, Messrs. Guest, Keen and Nettlefolds Ltd., has a group pensions scheme for its staff employees and it provides excellent medical, dental and welfare services in the works. I understand that its former works pension schemes were discontinued at the request of its employees when the State scheme became operative some years ago, but I am told that the firm is now contemplating a revised scheme of life assurance benefits to supplement that of the State.
In the limited time at my disposal I have tried, and I hope I have succeeded, in conveying some idea of the material and intangible benefits of these schemes. I am sure that hon. Members will be able to supplement what I have said with instances known to themselves.
My next task is perhaps more difficult. I ask the House to agree with the words which are in the Motion, and to say not only that it is impressed with the benefits which accrue from co-partnership schemes, but that it
takes note of their extension in recent years; and urges the Government to…equip itself with comprehensive information about them.
Our chief difficulty here is that factual information about these schemes is at present scanty.
It would be churlish of me not to refer to the excellent work of the Industrial Co-Partnership Association, but I am afraid we can obtain very little information about it at present from official sources. From my experience, my conversations with industrialists, my contact with the Industrial Co-Partnership Association, and other conversations, I am convinced that there has been a great increase in the number and importance of these schemes in recent years, and particularly since 1945.
Many of the schemes to which I have referred are new or are extensions and developments of old schemes. One of the most gratifying features of recent years has been that some of the largest industrial organisations, which held back from this kind of thing before the war, now tend to come forward. We are handicapped by lack of official information. In the 1920s, two official reports were published by the Ministry of Labour on co-partnership and profit sharing, but unfortunately they are both out of print, and I was unable to obtain copies of them, even in the Library of this House.
Between the two world wars and until September, 1938, a report on co-partnership and profit sharing schemes was published annually in the Ministry of Labour Gazette. Perhaps the Minister will explain later why that valuable service was discontinued and why it has not been revived since the war. The figures were based on voluntary information.
When I looked at the report for 1937 I found it most instructive, as it gave the approximate total number of schemes and the number of employees affected. It also gave separate details for private industry and about the considerable number of schemes that existed within the Co-operative movement. It is fair to say that not only did co-partnership develop in the private sector of industry


but, even before the last war, it was practised on an extensive scale within the Co-operative movement for the benefit of its employees.
I should like to quote one extract from the Ministry of Labour Gazette for 1938 to show the sort of information which was given there. It said:
Only two new schemes have come to the notice of the Department as having been introduced in 1937. One of these covers about 1,470 employees of a firm of warehousemen, importers and exporters.
In 1937, the total number of schemes was stated to be 410 and the number of employees 430,000.
In giving these statistics I am aware of the difficulties which the Ministry may face. I appreciate the limitations of records based on voluntary returns, and that false conclusions may be arrived at in certain cases when, for example, co-partnership or profit-sharing companies disappear through amalgamation. Such difficulties are not necessarily fatal to the records provided that the number of employees as well as the number of schemes is always included. The firm which survives after amalgamation may continue the co-partnership scheme, and the records will go on, showing an increase in the number of employees in the firm which survives.
The pre-war records show that until 1930 the number of co-partnership schemes progressively increased in this country. After the economic crisis of that year, the number of schemes declined steadily, but the interesting fact is revealed that after 1933, despite that fall in the total number of schemes, the number of employees affected increased. I imagine that to indicate that while the economic slump destroyed the weaker schemes that were less soundly conceived or established, the better schemes survived, and extended in size to cover a larger number of employees.
This is most valuable and interesting information. Similar information today would be of great value to this House and to the country. If the Motion were accepted, and statistics were once again published. I believe that we should find that there has been a steady increase since 1945, both in the number of schemes and in the number of employees affected.
I hope also that the Minister will give consideration to the possibility of publishing similar details of companies where some of the other schemes are operated. If information about co-partnership can be obtained it will be equally easy to obtain broad details of the schemes covering pensions, sickness benefit, and industrial insurance which may be carried on.
In the last half of the Motion I do not ask for legislative compulsion of any kind. Indeed, I do not think that this is a suitable field for compulsion. The success and durability of this sort of idea must depend upon the voluntary agreement of all concerned, including the trade unions. In all the schemes of which I have personal knowledge the trade unions have been consulted at all stages, and their local representatives have agreed in principle to each development before it has been introduced. I stress that point. I conceive it to be absolutely vital.
Although I am not asking for legislative compulsion, I want the Government to encourage these schemes by every possible means. There are difficulties which I want the Government to try to remove. These difficulties are considerable. I have been reading the speech of Mr. R. A. Banks, Personnel Director of I.C.I., at the 1954 conference of the Industrial Co-Partnership Association. It may be of interest to quote one or two sentences.
He said:
After considerable deliberation, a committee of the Board set down the following conditions which they felt must be reasonably met if a profit-sharing scheme were to be worth while.
Then he detailed the requirements, one of which was:
The scheme can be so framed that the cost is allowable as an expense for tax purposes.
That is one of the difficulties which he mentioned as personnel director of I.C.I.
Later, he said:
then there were other difficulties, of taxation and administration. As you know, these were eventually overcome.…
I emphasise the word "eventually." He added:
The difficulty about saying anything about the scheme at the moment is that some of the quite important details have not yet been entirely settled with the Inland Revenue.


I stress that to show how when I.C.I. was trying to introduce a scheme its personnel director referred to these difficulties.
I have details of another unusual scheme which was carried out in my constituency. It is the scheme called Guest, Keen & Baldwin's East Moor Works Employees Provident Society Ltd. I have a letter from their secretary, in which he says:
I have had to fight every inch of the way in the progress achieved.… A few months ago the Chief Registrar of Friendly Societies thought fit to refer to the scheme in his annual report…
Later in the letter, the secretary says:
Five years ago I sought registration under the Friendly Societies Act. This was refused.…I kept hammering away at the Registrar until finally we secured registration under the Industrial and Provident Societies Act. I have not given up the fight for registration under the Friendly Societies Act. I was with the Registrar for nearly two hours last Saturday battling for this registration.
In another part of the letter, he says:
Having lost registration under the Friendly Societies Act … I now ran into difficulties with the Board of Trade who insisted that we comply with the Assurance Companies Act.…
One of the requirements was that they should
… put down £20,000 deposit, or have paid up share capital of £50,000, or assets greater than our liabilities by £50,000 or one-seventh of our premiums …
The secretary also says:
Having achieved registration under the Industrial and Provident Societies Act we then ran into difficulties with the Inland Revenue. The authorities ruled that we were not entitled to Income Tax relief for the members on the contributions they paid.
The whole of the letter is along those lines. This is an unusual scheme because it is run by the workmen themselves, though with the authority, and indeed the assistance, of the company. I quote it because some of the difficulties referred to are of the type which are commonly encountered.
I apologise to the House for having spoken at length, but the field of this subject is extremely wide. One can only make passing reference to many of its aspects. Whatever we may have felt about these problems in the past we in this House have devoted inadequate attention to them. I am certain that here we have one of the few remaining

unexplored dynamics, if I may use this term, which may be of great assistance in future. As we have practised a unique system of democracy in our public affairs we surely need to increase and gradually enlarge the field of democracy in our industrial and economic affairs.
We have seen the benefits in the political world which have ensured the way of life which we enjoy, and which is the envy of the world. I sincerely hope that this debate and the acceptance of the Motion will be the first move to the enlargement of our knowledge of something which is very similar in the industrial and economic sphere. I trust that this may be fruitful in the long run not merely to our knowledge here but to our success in the competitive world in which we have to live.

11.47 a.m.

Mr. E. H. C. Leather: I beg to second the Motion.
May I start by underlining one point which I was pleased that my hon. Friend the Member for Barry (Mr. Gower) made? It is of absolutely paramount importance that all these schemes of pensions, co-partnership, profit-sharing or whatever they may be, should be recognised not to be in any conceivable way a substitute for the best possible wages. It is most important that that should be underlined, because in the past there has been on many occasions passive suspicion on the workers' side, if not positive hostility. In many trade unions there is still considerable passive suspicion and objection to these schemes based on those grounds which are very real and proper.
If there is any evidence that an employer thinks that he can in some way fool the workers by giving them a fancy benefit, which may turn out to be intangible, in return for wages which are not as good as they should be, that employer is doing a disservice and deserves to get it in the neck. I do not think that such tactics or ideas are very prevalent today. In fact, I will endeavour to argue that they are virtually extinct, although I agree that they did exist years ago.
As my hon. Friend the Member for Barry has said on more than one occasion, what we are discussing is human relations. We are not concerned in this House with the intricacies of working out the finances and economics of this, that and the other scheme. We are


concerned with human relations. I am sure that the Parliamentary Secretary, whose experience of these matters is second to that of very few people in any part of the House, would agree that in this context human relations and industrial relations mean almost exactly the same thing, because industry is the way of life, for good or ill, of the vast majority of our people. The whole way of life for most of us is conditioned by industry, manufacture, commerce, distribution, etc.
The next point which merits discussion, and on which I doubt whether we shall have any difference of opinion, is how extremely well a great many of our companies have done. My hon. Friend gave a number of illustrations from some of our great industrial concerns. It is the fact that good employers and companies in this country have done as well or better than their counterparts in any country in the world. I do not believe that we can learn very much on this subject by sending deputations to the United States, Sweden or anywhere else.
It is interesting to note that in the field of productivity, which is very much allied to this field, practically all the productivity teams who went to the United States came back and said, "They have much more than we have but very little that is any better." People who went to the United States for new ideas and new ways of doing things found practically nothing that could not have been found in the best factories at home.
Another development in the modern age, in the last 20 years or so, is the remarkable fact that by and large the best employers are the biggest ones. There are very few of the big companies, such as I.C.I., Lever Bros., Imperial Tobacco and the big car manufacturers, who have not been pioneers in these kinds of things. Many of them have carried industrial democracy a long way, by joint industrial councils, production committees and schemes of that kind. The laggards, with honourable exceptions, are more often among smaller firms.
If one is looking for the highest productivity and the most modern methods of mechanical handling, our big companies generally are among the world's leaders; but unhappily our average in this country is not so very good. We have a vast number of small and medium-

sized firms. I do not believe that we have much, if any, really bad management left in this country, but we still have a too much mediocre, lethargic, or indifferent management and too much mediocre, lethargic or indifferent workers. Our problem is not that we have not the best in the world, and not that we have a lot of the worst in the world, but that unfortunately there is a large gap between our best and the average in industry. I believe that that is borne out by experience time and again.
My hon. Friend the Member for Barry said that statistics on this subject have not been published since the war. I believe that some people would have a shock if the figures were published today. They would be amazed at the extent of the schemes. In my industrial experience outside this House, I spend virtually the whole of my working life talking to industrialists and visiting factories. It is very rarely in my experience that managements do not say, "Yes, we have a pension scheme, we have a profit-sharing scheme, or a workers' life insurance scheme," or something along these lines. Pension schemes are almost universal in big industry, and workers' councils and profit-sharing and all those other things are now very widely spread.
I am sure that we all agree with my hon. Friend the Member for Barry that none of us wants the Government to bring in legislation to compel anybody to do these things. We just do not believe that it is right, and it is no more practicable to compel employers and trade unionists to behave as it is to compel people to go to church or to compel children to eat their spinach. People do not react in that way. The Government, however, can persuade, encourage and publicise I ask the Parliamentary Secretary to consider very seriously whether they might not do more scolding. The Government can do a lot by patting people on the back when they do a good job, but I believe also that with due respect to the laws of libel, they might consider a little scolding when they find people guilty of crass industrial relations; when, for instance, there is a redundancy programme and they almost deliberately provoke industrial trouble. I ask the Parliamentary Secretary to consider whether the principle of always keeping in the background could not be broadened and brickbats


might not be handed out as well as bouquets. Occasionally it would put my hon. Friend the Parliamentary Secretary in the position of being unpopular with somebody, but I assure him that many of us would rush to his support.
I ask the Parliamentary Secretary to tell us whether he has anything in mind concerning a document with which some of us were very much concerned some years ago. It was called "The Workers' Charter." Many people who did not like it poked fun at those of us—my hon. Friend the Parliamentary Secretary himself foremost among us—who spent a great deal of time and thought in designing the Charter. I still think that it was a very good document. It may be a pity that it was produced by party politicians, but that is not a principle which should cause everybody in the House to retire forthwith. It may be a pity that because it was produced by party politicians when these matters were critical, it was drawn into party controversy.
What we said basically in the Charter was what the best employers in the country were already saying and doing. We did not pretend that there was anything new or spectacular about it. We tried to codify in a reasonably comprehensive way the best practices in industry and tried to have suggestions adopted by the Government. The idea of the prewar King's Roll was one method; another was to have a clause like the "fair wages clause" inserted in Government contracts so that if people wanted Government contracts they must live up to certain standards.
That Charter, in one form or another, was put before the pundits and the experts, the senior civil servants, the trade union leaders and employers' leaders on the National Joint Advisory Council. They all rather raised their eyebrows and said that they thought it was very nice, but they did not think that they should do anything about it. It is not my habit to gratuitously hand ammunition to the followers of the right hon. Member for Ebbw Vale (Mr. Bevan), but I am not at all sure that the employers and trade union leaders are not getting a bit too conservative—conservative with a small "c"

Mr. Arthur Holt: Or insufficiently Liberal.

Mr. Leather: I agree that they should be more liberal, also with a small "l". There is sometimes too much fear of change, which I think is a pity.
I believe quite frankly and candidly in the old-fashioned philosophy of the carrot and the stick. I believe that it is not only old-fashioned, I believe it is pure common sense, according to human nature, and no matter how well devised the schemes that we may have thought up to thwart it, they do not work in the long run.
I am not advocating any revolution from what we have now got. I support whole-heartedly, and always have done, the Welfare State. I am a passionate supporter of the practice and theory of full employment.

Mr. Norman Smith: Of what?

Mr. Leather: Of full employment. I am sure that the hon. Member would not disagree with that. As my right hon. Friend the Prime Minister once put this, very aptly and tersely, our problem today in industry is to ensure that the Welfare State in full employment is a spring board from which to rise and not a feather bed on which to sleep.
It is perfectly possible to have masses of welfare and full employment in a completely static and stagnating State—but not for long. One can do it wonderfully and have everyone completely happy and comfortable for a few years, but ultimately one goes broke. That, I believe, is our problem. When I say "the stick and the carrot", I am not advocating multi-millionaires on one side and starved unemployed on the other. That is not what anyone wants, and certainly not what I want. I am saying that I think in industrial and economic affairs we have not yet entirely adjusted ourselves to these new requirements, and we have not yet got the "stick and the carrot" properly worked out and working in a welfare, full employment economy.
That is our problem, and that is why I think some things have got out of hand at the present moment. We all agree that the ultimate objective which we all here have is to raise the standard of living of our people. That is why we are here. That ultimate objective today is primarily dependent on the productivity of our


industry. I do not think that any serious-minded person in any part of the House would question that fact, and, therefore, we would all agree entirely with the principle, which my hon. Friend stated, that to encourage co-partnership and good will and good relations in industry is a good thing, and to discourage them is a bad thing.
If I may, I will develop that one point further. Anything we do or say in this House in our capacity as politicians which assists productivity contributes, in its small way, directly to raising the standard of living of our constituents. Anything that we say or do that causes bad relations in industry, that deliberately sets master against man or man against master, that deliberately stirs up discontent and, in some cases, hatred, is a blow against good relations in industry, and a blow against high productivity in industry. Therefore ultimately, in its small way, it is a blow against the standard of living, of our constituents.
The standard of living of the workers in our constituencies is today directly related to the productivity of our industry, and that, in turn, is directly related to good relations in our industries. We cannot get good relations, good productivity and all these other things if we go about doing anything, openly or not, to upset industrial relations and to cause discontent and strife within industry.
This all boils down to two things—good management, on the one hand, and responsible trade unionism, on the other. Where we find these two things in partnership, we find a high standard of living. It depends on the leadership. I believe that the old dictum of the Duke of Wellington is true in industry and in the trade union world, that there are no such things as bad soldiers, only bad officers.
I was talking to a gentleman the other day who has spent much of his life sitting on wage and industrial disputes tribunals. He said, "In my experience, 90 per cent. of the cases that come before me are directly caused by bad leadership from the management or bad leadership from the trade unions. It is those kind of things that cause the trouble."
Finally, may I say that there is a pattern for all this? We are now saying

that co-partnership, pensions schemes and all ideas about bringing the workers into participation in industry help to produce good relations in industry, produce higher productivity, produce a higher standard of living for our people. Those factors follow in logical sequence. Can that statement be borne out by the facts? I think that it can quite clearly. If one wants to see where the average factory worker has the highest standard of living in the world, one has to go to the United States of America which has a high cost labour participating economy par excellence—high cost, high wages and high living standards. If one wants to see the lowest standard of living of workers in the world and the lowest standard of human rights, one goes to countries where there are low wages, no industrial development, and where the people would not know what productivity was about if one talked to them about it.
In our own country, we are very near to the United States and a very long way from the bottom; where do we find the highest standard of living amongst our own workers? Where do we find today the aristocrats of the shop floor—the people with the good homes and television sets, many of them today—and it is about time—coming to work in their own motor cars instead of on bicycles, and taking home pay packets of anything up to £15, £25 and £30 a week? On the average, I suggest that we find them particularly in three industries. We find them in the motor manufacturing industry, in the aircraft industry and in the chemical industry. Therefore, one can say that the theory I have been expressing is borne out in these industries.
Is it a fact that those industries which have these high standards and the best paid workers in the whole of the country have achieved this by the route we are suggesting? I think that the answer is "Yes."

Mr. Holt: May that not be because of the high protection which has been given to them at the cost of the rest of the community?

Mr. Leather: I entirely disagree, but I will come to that point in a moment. I believe that it is quite clearly for the reasons which bear out my theory. In


these industries we have good, scientific, progressive management; we have responsible, well led trade-unionism; and enlightened, well managed private capital. Those are the facts. There is private capital behind these industries, administered by individuals and companies, such as insurance companies and pension funds, with every regard for the public good, a thorough sense of social responsibility.
Finally, and above all—and this I think answers the hon. Gentleman's point—all these three forces are kept firmly on the rails and in line, not by politics, not by laws, but by the hard cold facts of competition.
If anyone in these industries or in any of the three parts of them got too greedy, they would lose their export markets, and they dare not afford to lose their export markets. We have here the three elements—progressive, strong management, powerful capital, powerful and wealthy trade unionism—in, I believe, just about the right balance. I do not want to see employers improve their position at the expense of trade unions, and I do not want to see trade unions further increase their position at the expense of employers. Today, in my view, the balance is just about right. In the industries I have mentioned, the three forces, labour, management and capital are tied together by the force of free competition. These are the industries where one finds the highest standard of living for the workers, and there is a moral in this over which we all might ponder wherever we sit in this House.
May I end with a conundrum? It has been asked, "Which is most important, labour, management, or capital?" The answer is another conundrum, "Which is the most important leg of a three-legged stool?" If one can answer the second, one can answer the first. Encouraging and extending these kind of schemes, about which my hon. Friend is so knowledgeable, throughout the whole range of industry, instead of just its cream, is a field in which there is great scope and a great dynamic—I like that word—for building further the industrial strength of our country and the prosperity and happiness of the people who send us to this House. I hope that the Government will be able to answer us in those terms.

12.12 p.m.

Mr. W. E. Wheeldon: We are all indebted to the hon. Member for Barry (Mr. Gower) for introducing this Motion. It is one of considerable interest, and it is one to which neither the House nor the country has given sufficient attention. If I am unable to speak with the same unqualified enthusiasm that he showed, I hope that I shall be able to make some contribution from my own knowledge of co-partnership schemes and my experience in industry.
He found some difficulty in defining a co-partnership scheme. I understand the difficulty, and I am not blaming him for that. But in the attempt he made, he missed out the most important and essential part of any co-partnership scheme, and that is the question of control. If a worker is to be a co-partner, it is not merely a case of pensions, wages and participation in profits, but of taking some part in the control of the establishment for which he works.
In the same connection, the hon. Member said that the rewards were comparatively small, and I agree. I am not unduly alarmed about that, because material rewards—and he was thinking of wages, bonuses and pension schemes—can very largely, but not entirely, be left either to the trade unions, or to the social legislation enacted in this House. But, in speaking of rewards, I should have thought that the most significant and most substantial reward was to allow the worker in the industry to participate in the actual management and control. After all, that is one of the most important, if not the most important, points of co-partnership.
In this country, indeed in every democracy, we want as many people as possible to be conversant with the art of Government. That is the great advantage of voluntary associations that have developed in this country. A man does not properly understand Government unless his experience includes having a position of responsibility. We find that in our own political organisations, in trade unions, in our clubs and so on. One may have a man who will come to meetings for years, but the moment he is given a job to do, perhaps with small responsibility, he looks at it quite differently. Industry in this


country would be very much stronger if we could enable more and more people to participate in its control.
One hon. Member mentioned the Cooperative movement, but said very little about it. That was peculiar, because part of his theme was that there is very little information today. Yet, what information there is is in respect of co-operative co-partnership schemes operated under the Industrial and Provident Societies Act. They are compelled by law to produce accounts and to give the fullest possible information to the public. For many years I have taken an active part in the Co-operative movement, and I submit that co-operative co-partnership schemes are the only examples of genuine co-partnership.
Merely to share in a proportion of the profits is not co-partnership. If the employee is to be a co-partner in the true sense, he must be associated with the control. It was significant that, in all the examples given by the hon. Member, he gave no instance where workers are allowed either to elect or to serve on boards of directors or management committees. I do not know of a single instance in private industry. There may be one, and I will willingly be corrected, but I myself do not know of one. For those reasons, I join with the hon. Member in asking the Minister of Labour to provide further information and statistics.
There is one further point before I come to what I want to say about cooperative societies. It is in reference to the point about the increase, or decrease, in the number of the schemes. The casualty rate in these co-partnership schemes has been extremely high. Here again correct information is not easily available, but so far as I can trace, in the years between 1900 and the outbreak of the war in 1939, no fewer than 250 schemes went out of existence. Many of those, as the hon. Member quite properly pointed out, went out of existence during times of depression in the 1930's.
These schemes, in some instances at any rate, have been subject to great suspicion by the workers, who realise that in times of depression their interests have been thrown overboard in the interests of the ordinary shareholders of the company. If that could be overcome, very well, but at the moment that suspicion is still present.
It may not be entirely justified, but there is still a lingering suspicion in the minds of trade unions about the so-called co-partnership schemes. They are benevolent in many instances but, in the view of the trade unions, it is a sort of autocratic benevolent capitalism which they would rather not have. Sometimes it is not merely suspicion, but open hostility. Although the development of co-partnership schemes goes back well over a century in this country—Robert Owen, the Rev. F. D. Maurice and the Rev. Charles Kingsley wrote and spoke about self-governing workshops many years ago—progress has been very slow.

Captain Christopher Soames: Do I understand that if in a certain industry there is a profit-sharing or co-partnership scheme whereby some of the shares are held by workers and some by shareholders outside, who provide the capital, and the industry falls into a time of slump, the benefits derived by the shareholders inside become less than those derived by shareholders outside? Surely that is nonsense? If the profits and dividends fall, that fall is felt not only by those who hold the shares inside, but by those outside as well.

Mr. Wheeldon: Everything turns on whether they are the same shares. These shares are of a quite different type—

Captain Soames: In many other schemes they are the same.

Mr. Wheeldon: Not necessarily. In any case, that does not remove the fact that in some instances there is still considerable hostility and suspicion.

Mr. Norman Smith: Is it not the case that if the shareholders holding shares outside see difficulties coming they get out, but the shareholders who are in the firm cannot get out and give up their jobs?

Mr. Wheeldon: That is true. There are societies which have had a continuous existence for 80 years or more, and I know of no similar example in private industry. In the Co-operative movement, there are about 40 co-partnership schemes covering a great variety of trades. Most of them are linked with the clothing trade, the boot and shoe trade and the printing trade, but it is interesting to


notice that even in professions like architecture and in films and publicity generally there are co-partnership societies operating today.
In all these societies, every worker above 18 years of age is eligible to become a shareholder. That, I think, is something which does not apply generally in private industry. I notice from the last figures which were made available that only 10 per cent. of the total membership in these societies is outside the co-operative co-partnership scheme. That, of course, takes into account those under 18. In one society 75 per cent. of the share capital is owned by the workers. They have almost complete control of the society. In the whole of the 40 societies within the co-operative co-partnership movement, we find that less than one-third of the capital is owned by individual shareholders outside the factory or establishment. In the context of the question of control and ownership, I think that important.

Mr. Holt: I agree that that is very important, but will the hon. Member say how the shares are obtained? Do the workers pay for them, or are they given below their real value?

Mr. Wheeldon: No, they buy them. In some co-operative co-partnership societies it is a rule that any worker on reaching a certain age shall subscribe for at least one share, and those shares are bought at the ordinary price. Usually they are £1 shares, but I am not quite sure on that point.

Mr. Norman Smith: They are not quoted on the Stock Exchange.

Mr. Wheeldon: No, they are not quoted on the Stock Exchange, and that is another important point.

Mr. Holt: They cannot sell them?

Mr. Wheeldon: Oh yes, they can sell them.

Captain Soames: Who to?

Mr. Wheeldon: They can sell them to the firm.

Mr. John Hall: Can these shares which an employee can buy, and is called upon to buy after having completed so many years' service, be bought

out of accrued profits or out of their own pockets?

Mr. Wheeldon: They can buy them out of their own pockets or through the provisions whereby some of the bonus they are paid is set aside. I understand that in certain circumstances they are able to buy them on an instalment plan. In every one of these societies the employees are eligible to nominate to the board of directors, and they themselves can serve on the board. Therefore, they participate closely and directly in the affairs of the society. At present, 65 per cent. of the representation of all these societies is by employees. In eight societies every place on the board of directors is occupied by employees, and in half of the societies 51 per cent. or more of the seats are occupied by employees. That is also significant, and it shows that in the co-operative co-partnership societies there is a real and genuine co-partnership idea. To the best of my knowledge, those are the only examples of the kind in the country.
These facts embody excellent principles. First, there is the principle of self-employment, which I think a good one. What is more, these schemes tend to security of employment and make for better industrial relations. It is a fact that in the co-operative co-partnership schemes never in times of depression has there been a single strike. That also is an important and significant fact. I do not suggest that these co-partnership societies are the answer to all our industrial problems; I do not think they are. Neither am I advocating that this type of co-partnership is suitable for all types of industry. I believe this country would be well advised to move to a greater degree to social ownership. Already we have schemes of nationalisation, public boards and so on, but I do not think that need be the pattern for the whole country—

Captain Soames: Would the hon. Member explain "social ownership"; does he mean nationalisation?

Mr. Wheeldon: By "social ownership" I mean that the industry, commerce and wealth of the country shall be owned and controlled so far as possible by the people themselves without the intervention of those solely concerned with the receipt of profits and dividends. There are many forms of social ownership, and I submit


that this idea of co-partnership is one which ought to be extended and developed. Therefore, I am in agreement with the Motion in so far as I hope that the Minister will agree to see that statistics are published and will give the information that is asked for. If that is done, it will be an advantage to this House and to those in the country who want to see better industrial relations.

12.30 p.m.

Mr. R. Brooman-White: The hon. Member for Small Heath (Mr. Wheeldon) very fairly said that the schemes of the Co-operative movement to which he gave such an interesting survey were specialised and not adapted to wide application. On the big issue of worker participation to an increasing degree in the responsibilities of management, this opens up the most complicated problems. I would agree with the hon. Member only to this extent. The German steel industry, with their mitbestimmungs berecht, has gone considerably further in that direction than any industry in this country. I know that the conditions of the German steel industry are just as different to conditions here as the Co-operative movement referred to by the hon. Member for Small Heath is different from the ordinary limited liability company. One must compare like with like, and I do not seek to draw more from that point than to say that there are possibilities of radical change which have been tried in other nations without in any way affecting efficiency, and that the field for experiment—in this case probably in the fairly remote future—are very wide.
The main point to which I want to limit myself is a much less controversial one. I do not want to take up time in going over general principles which have been so ably stated before, but I think it is generally accepted, on both sides of the House, that the extension of co-partnership is of great benefit to our general industrial welfare, both materially and in a more intangible sense. It is part and parcel of what Lord Baldwin referred to as far back as the 1920's, when he said that one of the great problems of the modern age was to humanise limited liability. We are progressively making steps in that direction.
Just as the nature of industrial processes change, so do the patterns of relations

within industry change, and everybody is seeking ways of giving to an industrial population which is increasingly better off materially and increasingly better educated, a sense of more responsibility and the wider outlets that increasing education demands for participating and sharing, and in every sense having a fuller life, in industry.
There have, of course, been hesitancies, and misgivings and there have been failures, and we can learn from them. When the hon. Member for Small Heath referred to the failures of small schemes in the past, his remarks were very relevant to what my hon. Friend the Member for Barry (Mr. Gower), who proposed the Motion, said: that statistics indicated that the schemes which had been knocked out in the past year were the small and, perhaps, the unsound schemes. The schemes which survived and expanded were the good schemes, and the schemes which have been introduced latterly have mainly been on a bigger and better scale and have benefited by the experience drawn from those very failures and difficulties of the past.
Nevertheless, I accept what the hon. Member said, particularly, of the English textile industries, which had some particularly bad experiences in the '30s: there are certain hesitations and misgivings still to be overcome. As my hon. Friend the Member for Somerset, North (Mr. Leather), who seconded the Motion, pointed out, in discussing these matters in the National Joint Advisory Council reservations have been expressed from the management side and from the trade unions.
I know that my hon. Friend the Parliamentary Secretary to the Ministry of Labour has done his best to further a more enlightened and progressive view on these matters, but it is a difficult process. I had some experience before the war in much the same sort of way with an organisation which called itself the Family Minimum and which carried out much of the initial work on family allowances. There also employers had certain hesitancy. The unions, too, had misgivings that their general bargaining position might be undermined. But both sets of apprehensions were ill founded, and the family allowance scheme has become part of the established practice of our country.
As my hon. Friend the Member for Someret, North has already said, a great deal of co-partnership work which was controversial or novel 50 or even 25 years ago has become part of established industrial practice. Practically every enlightened firm, for example, now engages in joint consultation, and the trend towards employees' shareholdings is moving ahead rapidly.
I entirely agree with what practically every speaker has said, that further progress depends upon encouragement and not on legislation. By encouragement and example by firms, and by a favourable atmosphere in industry as a whole, remarkable progress has been made in the last year or two. The I.C.I. scheme has already been referred to, and other schemes have been brought into operation or are under consideration for great industries, such as Courtaulds, Rugby Portland Cement, and others, supplementing and continuing the work which has been carried on for decades by enlightened firms, to a large extent by the great Quaker firms who have shown the way in so many progressive activities. I refer to Rowntrees, Bryant & May and the rest.
One of the latest and most encouraging developments comes from my own constituency, where Colvilles, in their recent flotation of shares, made special provision for employees' shareholdings—provisions which, I may say to the hon. Member for Small Heath, to a large extent met the kind of misgiving which some people have held and overcame the dangers which had been shown up by past experience.
The Colvilles shares were ordinary shares in the company, subject to all the protection of ordinary shares and disposable in the same way as ordinary shares. The facilities given by the company were simply for the purchase of the shares by employees. In an issue of shares which was under great public demand, employees were assured of getting lots of up to 200 shares on ordinary hire-purchase terms at 3d. a week per share out of wages for 104 weeks, totalling 26s. a share. According to my latest information, the response has been extremely encouraging. About 105,000 shares have been taken up and about a thousand employees are participating. I understand

that the kind of people who have taken up the shares range through the employees of the firm as a whole. People of all categories—not simply technicians and drawing office people, for example, but employees throughout the shops—have participated. This is extremely encouraging and represents a healthy and enlightened development. That is a scheme which has gone well in Scotland.
As the Government are seeking to encourage these things, I must, however, also draw their attention to a Scottish scheme which went badly, and which I do not think need have gone badly. Last July, I asked a Question about the attitude of the Government to co-partnership schemes, and I received a most encouraging reply. My right hon. and learned Friend the Minister of Labour said:
We welcome any arrangements which create harmonious relations in industry and, at the same time, lead to increases in productivity.
I then put a supplementary question, asking whether there was any substance
in recent allegations that Treasury advice about the fiscal effect of such schemes has caused a number of them to be deferred?—"[OFFICIAL REPORT, 15th July, 1954; Vol. 530, c. 663.]
I was told that the matter was one for the Treasury, to whom it would be referred. I was given to understand afterwards that there was no substance to any such misgivings. But what happened?
In the autumn of last year, the Royal Bank of Scotland had a block of 50,000 shares which it decided it would be advantageous to allocate to its employees. This proposal was rejected by the Capital Issues Committee. There can be only three grounds on which the rejection could have been made: misgivings about the actual organisation of the scheme, or its general economic implications, or opposition to the concept of employees' shareholdings as a whole. Surely it could not be that the Capital Issues Committee did not like the technical details which had been worked out by the Royal Bank of Scotland?
I would quote the views of the "Financial Times" on that matter. They were contained in an article on 4th October, which said:
We aver that there is not a man sitting on the Capital Issues Committee who has the knowledge and judgment of a member of the


Royal Bank of Scotland Board, and we think is a gratuitous insult to Scotland for this Cockney Committee to reject a request that is altogether reasonable.
I am sorry that my hon. Friend the Member for Edinburgh, South (Sir W. Darling) is not in his place. I do not think that any pressure of modesty or reticence could control him from making a suitable comment on that quotation. But the "Financial Times," perhaps, goes a little far, and I venture to say so even though I am a Scottish Member. There is, after all, a very distinguished Scotsman on the Capital Issues Committee, as indeed there is in practically every powerful commercial and financial institution throughout the British Commonwealth.
However, it is very difficult to ascertain what reasons can, in fact, have moved the Capital Issues Committee to reject that application. The actual financial proposals of the Royal Bank of Scotland were surely sound. The Royal Bank of Scotland could judge that. As to the wider economic implications, an organisation as responsible as the Royal Bank of Scotland is in a perfectly good position to judge those also.
I see that an issue of this kind by a bank could be held to have a certain economic aspect, that could be held not to be quite parallel with a similar issue by a productive industrial concern. The £50,000 involved is now fructifying in the coffers of the Royal Bank of Scotland rather than fructifying in the pockets of the people. Had it been distributed to the people, it might have had a mildly inflationary effect; as liquid capital in the bank it can perhaps more easily be used for further loans to productive industry. To that extent there may conceivably be some argument for the Capital Issues Committee's rejection of the application; I can see no other. But the sum involved is very small compared with the Royal Bank's financial activities as a whole. And it could scarcely create a precedent of which anyone need be afraid.
Banks can surely be expected to behave with discretion and with an eye to the wider implications in such cases, and if we are to try to encourage by example this type of employees' shareholding and co-partnership schemes, the example given by an institution of the financial probity and reputation of the

Royal Bank of Scotland would have an effect altogether out of measure with the trivial economic result, inflationary or otherwise, of an issue of 50,000 shares. If it is the Government's intention to encourage co-partnership schemes, I ask them to look at this case again, and to see that advice is given by the Treasury to the Capital Issues Committee to ensure that instances of this sort do not recur. I am sure that if the Capital Issues Committee had taken into consideration the urgent desire of the Government to encourage co-partnership schemes of this kind, it would have reached a different decision on the Royal Bank's proposal. The least that should be done, of course, is not to discourage such actions. What we have every right to hope for is that every practical measure, even quite small measures, will be taken actively to encourage them.
I do not want to delay the House by discussing technical problems and difficulties, a number of which have been instanced already. In general, I can make my point by saying that in regard to a recent employee shareholding scheme proposed by the Rugby Portland Cement Company the "Investors Chronicle" congratulated that company on the ingenuity with which it had found a way around the difficulties which had impeded the Royal Bank of Scotland. That is not the atmosphere in which we want to work. It should not be necessary to find ways round difficulties. The Departments concerned should be giving every encouragement to such proposals, and helping to iron out the difficulties and make the way smooth for firms trying out this sort of thing.
One or two small practical instances have been brought to my notice. I do not speak as an expert in these matters from either the legal or the financial side, but I am told that certain privately owned companies are inhibited by a feeling that if they introduce a profit-sharing scheme, the profits so distributed will be taken into account in assessing the company for Estate Duty. It is a technical point, and, I think, a rather hypothetical one at the moment. I have been given no specific instance of it, but I am told that certain people are nevertheless worried by these considerations, and that potential schemes may be held up.
There is a small and specific case about which I have had correspondence,


which concerns Devonmoor Art Pottery, Ltd., in the West Country. It is a small concern employing 40, 50 or 60 men. It was the intention of the owner of this privately owned company to bequeath the shareholding of the company to his employees. He was held up by legal difficulties under the trust. The gift was held void. A lawyer's letter on the subject said:
The difficulties … arise from the fact that the scheme put forward by the Testator is void as infringing the rule against perpetuities.… There have been many cases where the excellent intentions of a testator have been defeated by the application of the rule against perpetuities. The rule is a very old one but in my own view has outlived its usefulness and certainly modification of the rule is now called for if it impedes modern schemes for co-partnership.…
The letter then sets out some provisions of the Superannuation and Other Trust Funds (Validation) Act, 1927. It is suggested that some amendment to the Act might be made.
Another point with slightly wider application relates to pension schemes and the question of taxation. I believe it is quite simple for taxation remission to be given if a guaranteed sum is set aside against the pension scheme, but in the case of companies subject to widely fluctuating profits it is very difficult, if not impossible, for them at the moment to say that in a good year they will set aside a substantial sum and that in a bad year they will set aside nothing. There may well be many more technical points of a similar type, greater or less, of which I have no knowledge. All I wish to do at present is to ask the Ministers responsible to go into the matter to see what further positive action can be taken to facilitate every company that wants to broaden the application of these co-partnership principles.
This nation led the world in democracy. It led the world in many innovations in industry. We are now trying to lead the world in industrial democracy, and I hope that, in the spirit which has animated both sides of the House in this debate, these matters will be given every consideration and that everything will be done to encourage and help forward those companies that are pioneering the next stage on the road forward.

12.48 p.m.

Mr. Norman Smith: I have no desire whatever to be discourteous to the hon. Member for Rutherglen (Mr. Brooman-White), but while he was speaking I really did have the utmost difficulty in restraining what is, after all—I cannot help it—my natural propensity for risibility. He made an extraordinary attack on the Capital Issues Committee and set forth a whole dialectical argument as between the Royal Bank of Scotland and the Capital Issues Committee.
That argument just had nothing to do either with the purpose of the Capital Issues Committee or the matter before this House—unless, indeed, the hon. Member was trying to put up this case, that in allowing or controlling every act of investment we should give priority in this country, situated as we are, with over-full employment, possibly, and with our resources stretched, to furthering the principle of co-partnership rather than to saving dollars or increasing future productivity. If that is what he meant, then his argument makes sense, but it makes sense only from his debating point of view. It does not make sense in the context of any serious debate about the industrial policy of this country.

Mr. Brooman-White: I am sorry that I did not make myself clear to the hon. Gentleman. I was not going into the wider implications. All I was saying was—it seemed germane to the present argument—that a proposal by a highly responsible bank to go in for an employees' shareholding scheme was rejected by the Capital Issues Committee for reasons which had not been explained, for the Capital Issues Committee does not explain its reasons. That is a perfectly simple point, and entirely relevant.

Mr. Smith: Surely the hon. Member knows why the Capital Issues Committee exists. Surely he knows why the Royal Bank of Scotland exists. The latter exists in order to make advances to creditworthy borrowers, and it is concerned only with that. The terms of reference of the Capital Issues Committee are very much wider. They extend over the physical, financial, and other kinds of resources of this country, and how we are to use them most satisfactorily, having regard to the current need to


save dollars and increase future productivity. The Royal Bank of Scotland is fighting the battle on a small sector; the Capital Issues Committee is the G.H.Q.

Mr. John Hall: Would not the hon. Member for Nottingham, South (Mr. Norman Smith) agree that if the Royal Bank of Scotland had decided to issue £50,000 in the form of a bonus in bulk to their employees, that would have been mildly inflationary; but as it was, they wanted to issue shares, which would have left the money still in the coffers of the bank?

Mr. Smith: The hon. Member for Wycombe (Mr. John Hall) does not understand the problem posed by the existence of the Capital Issues Committee. It is not a question of inflation at all. It is a question of the most advantageous use of the resources of the country. That is all, and nothing more.
I really am sorry to intrude on the harmony of this happy party. We have had three speeches from Conservative Members opposite and one from my hon. Friend the Member for Small Heath (Mr. Wheeldon), all more or less blessing the Motion now before the House. I am sorry—I am not naturally quarrelsome—but I must introduce an element of disharmony, discord, negation, and destruction.
At school they taught me an old Latin tag,
De minimis non curat lex
which, if I remember rightly, translates itself rather freely as,
The law does not take account of trifles.
In the context of our country's economic situation today, the whole of this business of co-partnership and profit-sharing schemes is a trifle. It is something which is very tiny indeed. It does not make much difference either way to the future of Great Britain, which I cherish deeply and about which I feel strongly.
The hon. Members opposite who moved and seconded the Motion are, I feel, a singularly ill-assorted couple. If I had to make a list in descending order of Conservative Members and their potential propensity for eventually crossing the Floor of this House, I should certainly include the hon. Member for Barry (Mr. Gower) in the first six; and I should certainly include the hon. Member for

Somerset, North (Mr. Leather) in the last six—

Mr. Leather: That, I hasten to assure the hon. Member, would be typical of his standard of inaccuracy.

Mr. Smith: If the interjection of the hon. Member means anything at all, it means that he is quite likely to cross the Floor of this House in the near future, and that will raise complications on this side of the House.
Let us look at this matter. The Motion advocates co-partnership schemes, profit-sharing schemes, and that kind of thing. By hypothesis, therefore, we are concerned with allocating a dividend—there is something to be divided. If we are to give more—as I understand it, and surely the Motion does not mean anything unless it means that we should give more to employees under certain conditions—then, by definition, we are taking away from someone else.
It is a question of transferring a benefit, or some substantial financial consideration, which is a reality because some firm or trading concern—nationalised or otherwise, I do not know—has made a profit. It is, therefore, pertinent that we get the whole thing into perspective to see what does happen to the surpluses of industrial concerns in this country in the conditions of the mid-20th century. Unless we do that, we have no clear idea of the scale of the problem which we are discussing.
I have given a lot of thought to this, and at the risk of over-simplification. I should be prepared to assert something like the following. If we are dealing with a limited liability company, or even with the larger firms, private businesses, family concerns, and so on, which has a dividend assumed to be 1s., that dividend, for statistical purposes, may reasonably be taken as being divided into eight aliquot parts each of 1½d., of which I think it fair to say the Chancellor of the Exchequer takes four. He takes approximately half of the trading surpluses of the industrial concerns in this country. Actually, I think that he takes more—indeed, from the rueful look on the faces of some hon. Members opposite, I can tell that he does.
That leaves four aliquot parts out of the total of eight. I do not think that I should be far out if I said that of these


remaining four parts, ownership gets only one. The remaining three-eighths are devoted to modernising the plant, expanding it—what is called "ploughing back". Therefore, before we start to consider this matter we must remember that we are dealing with only one-eighth of the surplus. Four-eighths are socially appropriated. If hon. Members are in doubt about what I mean, I would say that social ownership is the sort of ownership which is not personal or absentee; but even that is a very rough definition, and I do not propose to elaborate the point. Half of the amount, anyway, is appropriated and used for various social purposes, whether to finance family allowances or to buy aeroplanes.
Of the remaining half, three-quarters of it—three-eighths of the whole—is concerned with expanding and modernising the plant. It is all very well to talk about the great advantages of modern technology, of machine and power production and all the rest of it, but this generation carries a very heavy burden.
Bulb issuing in bulb and never in flower.
The mere maintenance of the industrial plant is a burden represented by three-eighths of the total surplus, or three-quarters of what is left after the tax gatherer has had his portion.
We are, therefore, concerned only with the distribution of one-eighth of the total surplus. That narrows down the importance of this matter. It narrows the scope of our discussion, and we come back to this; that, after all, we are concerned with something which is comparatively unimportant.
The hon. Member for Barry, who, had he been here a few years ago, would have sat in this House as a Liberal, stressed the fact of what he calls human relations. That point was underlined by the hon. Member for Somerset, North, who used the kind of argument which one would expect from a North American. It is characteristic of North America and the North American outlook. It is the outlook of salesmanship. Here in England that is not the dominant outlook, and I hope it never will be. But Americans, whether they live north or south of the 42nd parallel, are dominated by the ideal of salesmanship.
The hon. Member for Somerset, North gave a wonderful example of salesman-

ship this morning; the sort of argument which one gets when one entrusts the presentation of one's case to someone who is versed in that art which, across the Atlantic, they think is the most important of all; but which is an art I personally do not possess, which to an extent I abhor, and even resent.
This was his argument. We are concerned with productivity: that is correct. He said that co-partnership and profit-sharing schemes were going to help productivity. Yes, I suppose that they are—they might. He said—he did not use these words, but it was to this effect—that because they will, they will sweeten industrial relations. That is the sort of salesmanship that has got the hon. Member where he is. That got him on the wireless. It sounds so wonderful. I have no doubt it secures votes in North Somerset. But it has no relation to the objective facts of the concrete world in which we live.
Industrial relations do help output. They do help productivity—so does a fine day; so does a Test match victory. I remember that when I used to go to work—it seems an awfully long time ago; so long that I can hardly remember it—I went in very much better heart if my party had done well in a by-election. In those days it had done well if it had got about one-eighth of the votes. Such an event helped my industrial productivity.
I put it to this practitioner of salesmanship, the hon. Member for Somerset, North, that industrial productivity is almost wholly a function of technology, and that the importance of anything that co-partnership can do, compared with the importance of the ploughing-back factor in the allocation of a surplus, is so infinitesimal that it is an offence against the rules of argument to introduce it into so important and influential a debating chamber as this House of Commons.

Mr. Leather: I agree with the hon. Member as far as saying that these things are a function of good management, but I feel that he grossly underestimates the other half of what we were talking about. He says that all these sins of mine are typical of North America. I would point out to him that it is not without significance that an extremely high standard of living for the workers is also typical of North America.

Mr. Smith: What is the hon. Member's idea of a high standard of living? Does he mean the possession of motor cars—whereby there is endless competition to drive faster than one's fellow men and to kill more children on the roads—and the possession of television sets? If that is his idea of a high standard of living, it is not mine. I want a democracy of cultured people, able to read rather than to sit in an armchair and look at television.

Captain Soames: Let the people buy books instead of television sets.

Mr. Smith: The hon. Member for Somerset, North said that profit-sharing and co-partnership schemes improved industrial productivity, and he used the argument of human relations. Let us remember the governing factor. We are here concerned with taking something from A to give to B. If that is not the object of profit sharing and co-partnership, then they have no object. We are concerned with taking something away from some form of owner in order to give it to some form of employee.

Mr. Leather: The hon. Member is deliberately missing the point. He is talking in terms of taking a fixed cake and saying, "We can take that piece away from somebody and give it to somebody else." That is completely contrary to our conception. We want to be constantly increasing the size of the cake. If that can be done it can afterwards be argued whether a greater proportion should go to the worker than to the shareholder. We are talking about increasing the size of the cake, and not cutting it up as it stands.

Mr. Smith: The hon. Gentleman just has not got the matter in focus. What he cannot dispute—and if he tries he will impose upon me the necessity of adducing figures to prove what I say—is that the proportion which is ploughed back is three times bigger than that which is paid out, be it to co-partners or absentee shareholders. He is, therefore, concerned with only 25 per cent. as compared with 75 per cent. In those circumstances, why, in seconding the Motion, did he continue to emphasise the possible but unproven and undemonstrated effect of co-partnership upon human relations in industry?
We must also remember that we live in a country where the most important industries—especially the three which the hon. Member for Somerset, North adduced as being the most successful, namely, the motor industry, the aircraft industry, and the chemical industry—are not usually owned by persons who, participating actively and in the flesh as managers, can form the party of the first part in the human relationship about which he is arguing. Human relations imply two contracting parties. The party of the first part is the manager—or the employer, if he is a personal family employer of the old kind—and the party of the second part consists of the employees or workmen, presumed by the terms of the Motion to have participated in schemes of this kind.
The reality of the situation is that in the most important industries there is absentee ownership on a tremendous scale. They are joint stock companies, whose owners today own shares in the chemical industry, tomorrow sell on the Stock Exchange to get into the aircraft industry, and the week after sell again to get into the motor car industry. How can there be any human relations between the employees—co-partners or not—and absentee shareholders who are not concerned with perpetuating the industry or securing its future, but only with the relative prosperity of that industry, measured in terms of the prosperity of other industries into which, if they see half the chance or any reasonable excuse, they are prepared to jump merely by lifting their telephones and speaking to their stockbrokers? Human relations do not enter into it.
The whole speech of the hon. Member for Somerset, North was utterly irrelevant to the question of co-partnership or profit sharing in industry. Even he had to admit that the laggards in this proposition were the small firms, and that the best practitioners were the largest employers. But, remembering that the largest employers, by definition, are absentee owners between whom and the workers there can be no personal nexus, his whole argument is invalidated. I do not propose to refer to him again, except to say that his most constructive contribution to the discussion was his plea that the Government should do a little more scolding. If there is one thing which the Labour Government tried, and from


which it did not get any dividends, it was exhortation. Scolding is the antithesis of exhortation, and the one is about as useful as the other.
This topic is very unimportant, anyhow, and I put that fact forward as the excuse—a very valid excuse—for the paucity of the attendance on these benches by Members of the party to which I have the honour to belong. Most of my hon. Friends will have thought. "What is the use of discussing something which might have been relevant and pertinent in the reign of Queen Victoria, but has been passed by?"
The hon. Member for Barry, to whose great sincerity I must pay tribute—and according to the custom of the House I should have begun by doing so—thought that he was giving a wonderful example by referring to the growing dimensions of co-partnership in the gas industry until it was nationalised by the horrible Labour Government. He said that in 1946 50,000 employees were sharing £400,000. If I have his figures correctly, that means £8 a year each. If anybody ever learned arithmetic at school, he would say that, by any criterion, £8 a year is a very small proportion of the ordinary wage prevailing in 1946. A wage of £7 a week would amount to about £360 a year, and £8 is about 3 per cent. of that.

Mr. Gower: The hon. Member may recall that those were the figures for 1937. I said that at that time virtually half the capital in the gas industry was affected by co-partnership or profit-sharing schemes.

Mr. Smith: That may or may not be true, but, if we are to think in quantitative terms, not even the hon. Member for Barry could represent that the pecuniary benefits accruing to each co-partner bore any important or substantial relation to his annual wage. Surely that proposition is unassailable.
I did agree with the hon. Member for Barry, however, in certain other propositions which he put forward. He quite rightly said that it is important not to divide this nation into employers and employees. I could not agree more. I have no sympathy whatever with the crazy, out-moded Marxist doctrine which sees Great Britain as an army of workpeople employed, on the one hand, and

an army of capitalist employers, on the other.
The capitalist system and the evolution of industry itself have changed, and have blurred the sharp outlines of the Marxist class struggle, which today means nothing at all, and I agree that far with the hon. Member for Barry. I am trying to get the hon. Gentleman to come over to this side of the House, so I shall be much kinder to him than I have been to his hon. Friend the Member for Somerset, North, who will never come over here.

Mr. Leather: The hon. Gentleman is right now.

Mr. Smith: The hon. Member for Barry also said that one can say that co-partnership schemes, schemes of profit participation, and all the rest tend to engender an atmosphere which is a source of stability. That is all right, and I do not quarrel with it. I would only point out that that is an almost infinitesimal contribution to the atmosphere in industry. There is so little of it that it really could not be considered very important.
Then, the hon. Gentleman made the third claim, to which I found it quite impossible to attach any importance—and here I thought his speech began to assume a certain appearance of unreality—that we ought to use the skill and wisdom of all people, and not of a chosen few. If we apply that to the industries from which this country, in the years that lie ahead, is to derive its livelihood, what sense does that make? We live in an age that is to be dominated not merely by atomic energy, but by a most extraordinary technological development called electronics. Some hon. Members have been to scientific establishments in which electronics are making rapid strides, and some of the things that one can see nowadays are really quite staggering.
Recently, much publicity has been given in the newspapers—from what source I do not know—to what I may call the coming of the automatic factory. These articles have been extensively syndicated in the provincial Press, which tells me, as an old journalist, that there are some very important influences behind these articles. Somebody very high up is taking care that this propaganda gets


across, and I know about that, because I was for three years a news editor myself.
These articles, contributed very largely by scientists and professors at universities, have pointed out, first, that the automatic factory has made much more progress in America and Russia than it has here; but, second, that it is making progress here; and, third, that it will have the effect of eliminating to a very great extent the human element from the normal industrial processes as those processes apply to the flow of materials through the factories—the raw materials going in at one end and the finished goods coming out at the other.
The hon. Member for Barry mentioned the Vauxhall Works at Luton, and these articles refer to the introduction of improved methods whereby the manufacture of gear boxes is very substantially carried through from the raw material stage of the casting by a process of going along a conveyor belt, with one man at the one end and another at the other, while an electronic box of tricks is carrying out the intermediate processes inside the chamber, or whatever it is, that is set aside in the works for the production of gear boxes.

Mr. Gower: I do not disagree with what the hon. Gentleman is saying, but immediately before, he objected to something which he quoted from my speech. Does he not know that I gave examples of works councils on which the workers were represented and of other cases of people rising from the ranks to achieve the more important positions in the factory?

Mr. Smith: I am sure that the hon. Gentleman said what he said with great sincerity, but he was deploying his case much too late in the day. Much of the work has necessarily been eliminated, and nothing can prevent this electronic box of tricks from taking the place of the workers or foremen, and to an almost incredible extent this is beginning to happen now.
I would put forward this submission to the House. No matter to what extent these ideas represented in the hon. Member's Motion may have been applicable to industry in the 19th century, or even in the first two or three decades of this century, the time has gone past when these ideas will be of any use, because there will not be the individual employees

to assume the role of co-partners. There may be a handful of more or less skilled labourers and a handful of technicians, draftsmen, etc., but the personal element will have abated through the ineluctable advance of technology, and the idea of co-partnership schemes will be as dead as the dodo.

Captain Soames: What does the hon. Gentleman visualise in regard to the population of this country when we reach this period when a factory will consist of two men making gear boxes?

Mr. Smith: I used to visualise it 45 years ago, when I forsook the Tory politics in which I was brought up, put on a red tie, jumped on a soap box outside the Swindon works, and demanded that production should be used to provide leisure for all. I visualised a population in which most of us will be able to have leisure of one kind or another, and when all the population will be able to have as good an education as the hon. and gallant Gentleman had, in order that they may be able to enjoy that leisure.
I revert to co-partnership: let us get down to brass tacks. I propose a form of co-partnership and profit sharing which is really relevant to the highly technological developments taking place in the age in which we live. We have admitted, and even the hon. Member for Somerset, North did not deny, that what is ploughed back is three times the allocation of the surplus made by industry and distributed to the ownership. Nobody can deny it. I am not imputing any lack of frankness on the part of the hon. Member for Barry; as regards the hon. Member for Somerset, North. I do not know.
It is very curious that neither hon. Member made any reference whatever, in discussing this question of the allocation of the surplus, to the fact that three-eighths of the surplus will in fact be ploughed back, and that is important in this connection of co-partnership schemes, because it is here that we get profit sharing which is really possible. Here is scope for applying that idea, if we will but do it, because we all know that, when we plough back, as we do normally, three-eighths of the surplus and use it for extending plant, there is a sequel, and that sequel follows a few years later, and


some wise boys who read the "Financial Times" day by day watch for the signal.
The time comes, after a suitable lag, when the absentee owners, the equity shareholders—the personal employer really does not matter in these days; I like him much better than the equity shareholder, but I cannot help that—get what has been ploughed back, because it is reflected in issues of bonus shares. Why should they receive bonus shares, which simply represent the financial reflection of the new plant paid for out of the surpluses formerly devoted to plant extension?
My constructive contribution to this debate, the handsome suggestion which free, gratis, and for nothing I offer to the hon. Member for Barry and his hon. Friend, is this, and this is where legislation might come into the picture, because I do not see how we could do it without legislation. The workmen in the plant did help to create the three-eighths ploughed back just as much as they helped to create the four-eighths taken by the Chancellor of the Exchequer and the one-eighth that goes to ownership. That being so, they are surely entitled to their share of the three-eighths which is ploughed back.
It would be sensible profit-sharing legislation which compelled all these issues to be divided equally between the absentee owners and the employees of the firm. That would achieve something rather wonderful. I am not thinking of a few more pounds a year coming into the homes of the workers. After all, many of them already have adequate incomes and are not dissatisfied. And what is there to spend it on, except worthless baubles like television and radio?

Captain Soames: The hon. Gentleman started his speech by teasing my hon. Friend the Member for Rutherglen (Mr. Brooman-White) for introducing the Capital Issues Committee into this debate. He is now suggesting that bonus shares should be introduced, but would not the approval of the Capital Issues Committee have to be obtained in order to do that? Is not that the very point which my hon. Friend tried to make, and on which the hon. Member for Nottingham, South (Mr. Norman Smith) poured so much scorn in, I agree, a

rather diverting manner, earlier in his speech?

Mr. Smith: That has no relevance to the subject, and I will tell the House why it has no relevance.
I am assuming that real bonus shares are contemplated and authorised. I am not talking about the bonus issues which the Capital Issues Committee rejects. There are plenty of real bonus shares which the Capital Issues Committee does not reject. I have met the hon. and gallant Gentleman's interjection by saying that I am only concerned with such shares.
Let them be legislatively divided equally between the absentee owners, on the one hand, and the workers on the other. That would give the workers in a factory owned by absentee owners—that is to say, in the highly efficient large-scale industries—a direct incentive to have more ploughed back and more with which to modernise the plant in order to bring the concern up-to-date.
I say this because I am profoundly convinced that what matters to the future of our country is not that either labour or capital should have more at the moment but that plants should be modernised and brought up-to-date. If Britain is to survive, more must be ploughed back. It is in this connotation that these ideas of profit sharing and co-partnership can be applied, but they would necessitate company legislation.
There would be need for an element of compulsion. There would have to be compulsion. Little as anybody may like compulsion, what else can there be but compulsion in an atomic era, even in the present pre-atomic era of large-scale joint stock enterprises? There is bound to be compulsion, and that is my contribution to these ideas.
I am not going to vote against the Motion or to divide the House on it. There would not be any point in doing so, because the Motion is not important anyhow. But I rejoice that, at long last, I have had an opportunity to put before the House the real line of industrial, financial, and labour policy that matters. I hope that hon. Members who follow me will be graceful enough to admit that really a good idea has been contributed, that for the first time something original


has been said, and that they are prepared to support it.

1.25 p.m.

Captain Christopher Soames: We have had two most interesting speeches from the benches opposite, one from the hon. Member for Nottingham, South (Mr. Norman Smith) and the other from the hon. Member for Small Heath (Mr. Wheeldon). I think it true to say that whereas the hon. Member for Small Heath does not believe in the principles of co-partnership and profit sharing which have been dicussed in the House today, but said that he did, the hon. Member for Nottingham, South does believe in them, but said that he did not.
The first half of the speech of the hon. Member for Nottingham, South was devoted to saying how frightfully unimportant these matters were and how they could not in any way assist the industrial relations or productivity of the country. Then, at the end, he put forward what many hon. Members on this side of the House, I am sure, will agree with, namely, that one of the best methods of achieving this co-partnership and profit sharing is by giving a proportion of bonus issues to the workers. That is the pure milk of co-partnership and profit sharing. The hon. Gentleman finally came down on the side of co-partnership. He said that he was not going to divide the House on the Motion—though he said it rather grudgingly—because he thought it was not important enough anyhow.
In spite of the arguments adduced by the hon. Member for Nottingham, South, I am one who believes that compulsion from this House and from the Government is not the way in which to achieve an extension of the principle of co-partnership. I think that there will be compulsion, but not from this House. I think the compulsion will come from the fact that it should be the custom throughout the country when a man is interviewed for a job, and when he naturally asks what wage he is going to receive that he should also ask what are the principles of co-partnership practised in the firm with which he is seeking employment.
I believe that the compulsion can only grow to the extent that co-partnership becomes normal practice, so that all firms will realise that unless they have some

form of co-partnership scheme they will not get the standard of labour which they wish for. It is certainly not a matter for legislation. Obviously, it cannot be, because the problems of every industry differ, and the problems of every firm within each industry differ. This is not something which could be laid down by Act of Parliament. Indeed, it is only by means of a Private Member's Motion such as this that the matter can be discussed at all in this House. I wish to congratulate my hon. Friend the Member for Barry (Mr. Gower) on the fact that when he won in the Ballot he chose this subject for discussion.
Unlike the hon. Member for Nottingham, South, I think it is of the most vital importance in the mid-twentieth century that these principles should be aired and talked about, and should become more widely thought of throughout the country. Particularly is this a suitable subject at the present time when we are going through a period of economic prosperity such as the country has never known before. We are going through a great boom.
Only yesterday an hon. Member asked my hon. Friend the Economic Secretary to the Treasury what were the increases in profits and wages during the past year. The answer given was that there was some 24 per cent. increase in profits and some 5 per cent. increase in wages. There was a lot of derisive laughter from the benches opposite when the answer was given. It appeared that the laughter was born of the feeling that too much was being given to the shareholders and not enough to the wage earners.
The hon. Member for Nottingham, South says that is not important at all. He says that it does not matter. But it does matter. It is fundamental to our economic problems. In an article in the "Sunday Times" two or three weeks ago, Mr. George Schwartz poured scorn on the right hon. and learned Member for St. Helens (Sir H. Shawcross) for saying in a speech he made in the country that while we all welcomed the boom and prosperity which this country was enjoying, we must, at the same time, ensure that the profits derived from that boom were spread out in an equitable manner. The hon. Member for Nottingham, South does not like that.

Mr. Norman Smith: The hon. and gallant member must not misrepresent me like that. He knows as well as I do that what is ploughed back into industry is three times what goes to ownership. The case that I put to the House was that the future of the country depends upon industrial plant being modernised. That is something far greater than an ungodly row between employers and workers as to whether the workers should get 6d. a week more out of co-partnership.

Captain Soames: It is of vital importance for a firm to decide, after wages have been paid, all the normal running expenses of the year have been incurred and a proportion of the profits has been ploughed back, how and to whom the remaining profit is distributed. That surely affects the future of industrial relations, and thus the productivity of our country.
We are at present experiencing a boom. Some people say that we should move into the sort of high-wage economy as enjoyed in North America. Of course wages will continue to rise, but, in the peculiar and particular circumstances in this Island, dependent as we so largely are on our exports and on our capability to compete in world markets, we could never enjoy a high-wage economy equal to that of the United States. At the present time our economy is flourishing, but when the economic winds begin to blow cold, as they will inevitably do sooner or later—

Mr. Smith: Why?

Captain Soames: It would be wrong for us to think that we were in for a perpetual boom for the next 100 years.

Mr. Smith: Why not?

Captain Soames: We have to compete in the world market. We may have to face a buyers' market rather than a sellers' market. The way in which we must examine this problem now is how we can, apart from the normal negotiations for increased wages, supplement those wages during this boom, and how we can enable the workers to participate to a larger extent in the increased prosperity.
Some think that the answer lies in bonus schemes. There are many advantages to be derived from profit-sharing schemes which cannot be derived from

bonus schemes. I would divide them into short-term and long-term advantages. The short-term advantage undoubtedly is increased earnings and a higher standard of living for the workers, which can be met by a bonus scheme; but the long-term advantage is improved methods and relationships and that can be derived from profit-sharing and co-partnership and not from a bonus scheme.
Unlike the hon. Member for Nottingham, South, I believe in the improvement of industrial relations. During the last 50 years we have been through a social and industrial revolution, and we have reached a level of social awareness in industry today which did not exist at the beginning of the century. There was a lot of bad management in the nineteenth century. I am not saying there is none today. In an industrial nation the size of ours it could never be said that there was no bad management, but the degree of understanding between labour and management today is infinitely greater than it was at the beginning of the century.
This fact does not prevent people from stumping the country and trying to stir up animosity and hostility between management and labour. There are still those who preach: "What is good for the shareholder and for capital in industry is automatically bad for the worker." That kind of talk is still going on. We want to kill that lie for ever, for lie it is. It is talked very loosely sometimes for political reasons, but hon. Members on the Opposition side know just as well as we do that it is a lie, that it does harm to industry and to productivity.
I disagree fundamentally with the hon. Member for Nottingham, South when he says it does not really matter how profits are divided up because the portion is so small. I do not want to misrepresent him. The importance does not rest so much in the day-to-day benefits, be they large or small, but in the long-term benefits of greater understanding between two sides in industry through the realisation by those working in industry that their future is bound up with the profitability of industry, in just the same way as is the future of capital. Capital, management and labour are all partners, and large profits and high productivity should be seen to be good for all.
I would not endeavour to put forward any suggestion of the particular form that profit-sharing or co-partnership should take. I started off by saying that all firms have their problems and that schemes are bound to vary in different firms. It is not for me to suggest what form they should take. There are many who have had experience in this matter. I most earnestly hope that more firms will realise that through co-partnership and profit-sharing schemes will come better industrial relations, leading to increased productivity and a higher standard of living for all. That should be the aim and the object of all of us in this House.

1.40 p.m.

Mr. Arthur Holt: I have great pleasure in supporting the Motion. It is with no disrespect that I say to the Parliamentary Secretary to the Ministry of Labour that I regret the absence of any representative from the Treasury. The interest of the Parliamentary Secretary in the welfare side of industry is well known. However, it was obvious when we heard the speech of the hon. Member for Rutherglen (Mr. Brooman-White) that there are many taxation questions which are holding up the development of desirable schemes.
It has sometimes been suggested that it would be excellent if the Government introduced special measures to give privileged positions to co-partnership or ownership schemes. I have never favoured that course. Sufficient impetus would be given if the Government would merely remove the barriers which operate unfairly against the introduction of true ownership schemes. That they do not is most unfortunate. I hope that it does not indicate an attitude of mind on the part of the Government.
I was most interested when the hon. Member for Somerset, North (Mr. Leather) courageously mentioned the Conservative Party's "Worker's Charter," which seems to have gone into oblivion. I understood that the ownership by more and more people of houses and other things, including ownership in industry, was a big plank on the Conservative Party's platform. I believe that the Parliamentary Secretary still has powers of direction. I hope that he will use those powers to ensure that there is compulsory reading of the report of this

debate by the Chancellor of the Exchequer and senior officials at the Treasury, who should give a lot of serious thought to the various taxation problems which are constantly being raised by those who wish to introduce these schemes.
The hon. Member for Rutherglen has provided the last straw, the final reason for closing down the Capital Issues Committee, which should have been closed a long time ago. If the Committee really interferes in the way he suggested, it has long outstayed its welcome in our midst. I am sorry that the hon. Member for Somerset, North is not here at the moment. He made some provocative remarks with which I shall deal if he returns.
The hon. Member for Nottingham, South (Mr. Norman Smith), who said that he was wasting his time—as he was—wasted ours for about 35 minutes. I agree with the hon. and gallant Member for Bedford (Captain Soames) that, in the end, he did not waste all his time because, in spite of everything, he came out with something which was tangible and very nearly sensible. If he had left out the compulsory part, it would have been excellent. I refer to what he said about the Government facilitating the giving of bonus shares to employees where companies feel that that is desirable.
The hon. Member for Barry (Mr. Gower) looked firmly across the Floor when he said that he was against compulsion in this connection. I looked at my Chief Whip and he looked perfectly innocent. I also am perfectly innocent in this matter. Whether the hon. Member for Barry was referring to someone outside who believes in compulsion, I do not know, but I think that the real reason some people have advocated compulsion is that they have begun to despair of the real kind of progress that is required and which would do great good.
The real reason progress is slow is the hindrances caused by the Income Tax Acts. If we remove them, development will be a great deal quicker. It has not always been very clear whether some hon. Members, when referring to co-partnership have been talking of ownership or profit sharing. A tremendous good could be obtained if we were able to secure


more statistics about the various schemes, as suggested in the Motion. I have no doubt that if the required information were asked for on a wide basis, we should find that most of the schemes still merely give people a share in one form or another of profits. It may be in the form of Christmas or holiday bonuses, or merely profit bonuses, but they all come before taxation. The gross profits of the company are reduced by the amount given to the workpeople. This is all very good, but it is never any substitute for good management. That is the prime necessity.
None of this has any social significence, and this is the really important feature. There is social significance in ownership, and that is the part of the matter which the Government should start to encourage. Ownership means ownership—nothing else. It means that a man has something which is his own to do with as he will within the law of the land. He can sell it or he can get some more. Attempts to provide a form of ownership which is unlike the ownership of the ordinary shareholder are always unsatisfactory in the end. The hon. Member for Small Heath (Mr. Wheeldon) was referring to those types of schemes when he said that in bad times they break down and leave a rather bad taste in the mouth, and profit-sharing or co-partnership has been condemned in the eyes of those concerned because of that.
There is only one thing to do, and that is to spread the equity shareholding of industry wider and wider in the hands of the workpeople. If some, because they have little reserve, sell and put the money into savings banks, there is no reason why they should not. That does not spoil the principle. The Chancellor of the Exchequer has made a great song about the fact that in 25 years we could double the standard of living if we worked in die right way, so that many people who earlier might have thought that it was unwise for the workers to have the little they had in equity shares might think it more and more wise for them to have something in equity shares in years to come. This condemnation of employees holding equity shares will be of less and less importance as the standard of living increases.
I should like to focus the attention of the Government on the attitude of the

Inland Revenue, backed by law—I believe under the Income Tax Act, 1918, Schedule E and the various case laws that have been built on it—to the giving of shares by a company or by its shareholders to employees. Let us imagine a small company of 500 employees with a paid-up capital of £100,000. We assume that profits have been ploughed back for several years and the real capital has been doubled to £200,000. The directors might have said to themselves, "We must start to capitalise. We do not want to pay a lot away. We want to solidify the position and carefully build up the capital. "Let us assume that in the last year the company made a profit of £50,000 after depreciation and before tax. The position could be dealt with in several ways.
Let us suppose that a company paid out a Christmas bonus just before Christmas, knowing from its excellent costing system that it was going to make a profit. If it paid out £20 to each employee—that is, a total of £10,000—it would immediately reduce profits to £40,000 on which tax would be paid. The effect of that decision not to keep profits but to pay out a bonus of £10,000 to employees would be that the Chancellor would immediately lose £4,750, or 9s. in the £ plus 2½ per cent. Profits Tax. That, in the terms of "1066 And All That," is called a good thing. The Chancellor does not mind. He loses this money and never bats an eyelid. All that he receives is a slight recoupment from the workpeople when they receive the £20, according to their code of allowances. Taking the average of industrial workers, the Chancellor might keep £200 or £300.
The company really did not want to do that. It wanted to plough its profits back and build up its capital, but it felt that if it could only get its workpeople to feel that they owned some part of the company and some interest in its future that would be an excellent thing and perhaps it would lead to increased profits. Therefore, instead of doing that with the £50,000 profit, the company might say, "No bonus this year. We have had a word with the shareholders and they have agreed that there shall be a small bonus issue equivalent at market value to £10,000 worth. You will get this instead of a profit bonus in cash. You will receive bits of paper which will show that you are a shareholder in the company.


The value of the bit of paper on the market will be £20."
What happens? The Chancellor, of course, immediately gains in tax, because the company has to pay tax on £50,000 whereas before it only paid on £40,000. Therefore, apparently, this is a bad thing not to be encouraged and the company will not like to do it. In addition, of course, under the present laws the Chancellor receives the same amount from the workpeople as he would if they had received a profits bonus. He still receives his £200 or £300, because the bonus shares are assessed by the Inland Revenue on market value. Despite the fact that they receive no cash, the workpeople are charged in their codes with the appropriate tax. They get no money, and therefore they lose money and have to pay a tax out of their wages.
Obviously, this does not encourage ownership in industry. When one remembers that even in the next year these shares now owned by the employees will come in for profits distribution tax, it really piles on the agony. I know that there are complications in this matter, but I suggest that they are nothing compared with the advantages that would be obtained by altering the law to provide that these bonus shares, or any shares coming to employees below their real worth or for nothing, should not be taxed. That is the simple proposition which I put forward and which I hope will reach the Treasury and have some consideration. If a step is taken in that direction, we shall see a substantial advance towards ownership in industry.
I do not feel that it is necessary in this House to say any more about the good (hat will come from it. Most people, both in the House and outside, recognise that the greater the responsibility the greater the stability of society. Although I am a completely unrepentant supporter of a free economy, I am, strangely enough, a great supporter of the idea that the people should own all the means of production, distribution and exchange, though, of course, not by nationalisation, for nationalisation has been generally shown to be no ownership at all. It is ownership by nobody.
A real spread of share-holding in industry, little by little seeping out throughout the community, would result in the people owning the means of pro-

duction, distribution and exchange. I think that we all recognise that to be a most desirable development. I hope that the Government will be really stirred not only into carrying out some of the other suggestions which are made in the Motion about obtaining statistics, but into examining the tax situation with regard to the ownership of shareholdings by employees.

1.57 p.m.

Mr. A. G. Bottomley: I hope the hon. Member for Bolton, West (Mr. Holt) will not mind if I do not follow him in his discourse on taxation and its relationship to co-partnership but get back to the main question. I should like to congratulate the hon. Member for Barry (Mr. Gower) on raising this question, which is of such importance and great interest.
The hon. Member for Barry rightly referred to the fact that we are the envy of the world as a political democracy. But if we are to keep up our democratic practice as an enviable quality throughout the world, it must be done by providing for an equally democratic way of discussing economic matters, and the hon. Member's contribution to today was a pointer in that direction.
In spite of the occasional jeers and laughter during the speech of my hon. Friend the Member for Nottingham, South (Mr. Norman Smith), I really think that he struck at the roots of the problem. I am a little younger than my hon. Friend, and I have followed a good many of the tenets which he and his colleagues have advocated. I quote in support of his view on co-partnership the great Bernard Shaw who, when he went to his first Fabian Society meeting, spoke of the desire to say nothing that might give pain to particular classes.
The account of his speech goes on:
He was about to refer to a modern class, the burglars, but if there was a burglar present he begged him to believe that he cast no reflection upon his profession, and that he was not unmindful of his great skill and enterprise; his risks—so much greater than those of the most speculative capitalists, extending as they did to risk of liberty and life—his abstinence, or of the greater number of people to whom he gave employment, including criminal attorneys, policemen, turnkeys, builders of gaols, and it might be a hangman.


He went on to say that
He did not wish to hurt the feelings of shareholders … or of landlords … any more than he wished to pain burglars. He would merely point out that all three inflicted on the community an injury of precisely the same nature.
We are not talking about managements and workers. We are talking about these people in the sense in which my hon. Friend the Member for Nottingham, South made his observations.
Reference was made quite rightly—and I support it—to the Minister of Agriculture and his part in this co-partnership association. Indeed, he was very active when I was Secretary of State for Overseas Trade, and he invited me along, because he realised the importance to the country of exports, to a meeting of industrialists and others. We thrashed out some of the problems which enabled us to overcome the difficulties then confronting us. His approach and that of many of his colleagues was the Christian approach, and I would say that it is in the smaller industries, in the family businesses, which are now disappearing, that we find this relationship.
In that respect, I differ from the hon. Member for Somerset, North (Mr. Leather), who paid great tribute to the larger organisations. Let us not lose sight of the fact that in the case of the larger organisations there is not the same outlook that there was in the earlier industrial co-partnerships. In the larger organisations—quite rightly from the realistic point of view—they realise that, by giving the workers better treatment, they get greater production and make greater profits. It is as simple as that. If a profit was not being made, I do not think there would be the same appeal to these great industries as in the case of the smaller industries. I think that the hon. Member for Somerset, North, who is not present, will find it difficult for him to square what he said this morning with what he said recently when dealing with the railway industry.
We have to look at the industries necescessary for the national well-being. Perhaps I might refer to an industry with which I was connected for a long time—the local government industry—in which road sweeping, health services and other things of that nature were not profit-making and which had to be looked after

by someone. The municipalities did it, and we found co-partnership of the best type. The workers were able to take part with the officials in settling things on a fair and friendly basis.
It has been said, quite rightly, this morning that the best industrial co-partnership, and the really effective one, is that in the co-operative industry. I agree with the Motion that such things as health and pensions schemes are absolutely necessary, but we do not depend for these on the basis of whether industry makes a profit and can afford to give these things. Those days are long past. The Liberals played their part, but it was with the formation of the Labour Party that we realised that these things had to be put on a higher level. They were a national responsibility, and it was for that reason that the 1945 Labour Party came into power, and its Government thereafter built up national service and pensions schemes and created the Welfare State.
Last year I took part in a debate with the right hon. and learned Gentleman who is now the Attorney-General. He was then the Solicitor-General. We were debating at University College, and at the end of the debate we had the usual dinner. The history professor, who was non-political was proposing a toast to both of us. He said that in the case of the Solicitor-General, as he then was, it was a great historical occasion that the Solicitor-General of the day in the reign of Queen Elizabeth II should be following somebody connected with his family who was Solicitor-General in the reign of Queen Elizabeth I.
I felt some anxiety when he looked at me and said, "What shall I say about Mr. Bottomley?" I was delighted when he said that history would record that he was a member of the Government that created the Welfare State. I think that the Welfare State will look after many of the things which otherwise would have had to be done by industry, but which times have shown are no longer possible from that direction and have to be done in the form of national responsibility.
I was glad to hear it said that the trade unions cannot be ignored in this matter. They play a most important part. The removal of the Trades Disputes Act gave the trade unions their rightful responsibility. The trade unions today are part


of the social fabric of the nation, and, as such, we cannot ignore their views and their contributions. Therefore, I would conclude by saying to the Parliamentary Secretary—I do not know what he is going to do about this Motion and whether he will accept it on behalf of the Government or not—that if it is accepted, the proper thing to do, after the House has discussed it, is to talk to the National Production Advisory Council, on which there are not only trade unionists and employers, but others who are interested in the welfare of our country.

2.7 p.m.

The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Harold Watkinson): I am glad that the right hon. Member for Rochester and Chatham (Mr. Bottomley) has indicated that he welcomed this Motion on the whole. I think he made an interesting suggestion—that when this House has debated it we should try to carry it in one of the joint industrial bodies. He mentioned the N.P.A.C.I. and there is also the Minister of Labour's National Joint Advisory Council. I will bear his suggestion in mind. I think it is a very valuable one.
The right hon. Gentleman also said that we differed about profitability and about what are the right incentives. That is why I thought that the House would wish me to intervene at this stage to give the Government's view on the Motion which was so ably proposed and seconded by my hon. Friends the Members for Barry (Mr. Gower) and for Somerset, North (Mr. Leather). May I apologise for the fact that if the debate runs to the end of the day I shall not be able to see it out as I find it difficult to cut myself in half. May I congratulate the hon. Member for Barry on raising this topic, because the broad issue which we are discussing affects 23 million people in our working population in one way or another.
Before I deal with the detailed points which have been raised I want to state as simply as I can the general policy of the Government on this very broad issue. My hon. Friend the Member for Somerset, North suggested that the approach was based largely on human relations. I think it is based on what is the best driving force behind our economy. We are convinced that our success or failure as a

nation depends on the very difficult competitive years that lie ahead. I believe that they will be difficult and I think that the hon. and gallant Member for Bedford (Captain Soames) was right to talk about that aspect of the matter. It is too easy, when we are in the middle of prosperous times, to forget that this nation lives only by trade in a very tough and competitive world. I am glad that he introduced that element into our debate.

Mr. Bottomley: May I say that I share that view, and I strongly recommend that it be uttered again and again.

Mr. Watkinson: I am glad that the right hon. Gentleman has mentioned that because I think it is the right background for this debate.
This debate is not an idle exercise in airing theories such as the hon. Member for Nottingham, South (Mr. Norman Smith) wished to indulge in. It is a practical discussion on how this nation can become more and more prosperous in a more and more competitive world. That can be done only by having powerful incentives for every man and woman in the working population. In other words, if we want to maintain full and profitable employment, we have to maintain full and profitable deployment of all our resources of skill and technology.
While it is easy to show that theoretically one can get 10 or 20 per cent. increase in efficiency, it is not quite so easy when one tries to do it in practice. People who rely entirely on what I might call the soulless statistical approach, and who think that by introducing a new machine, or a new system, they can get a great gain on output, are very often very much disillusioned.
I know that I carry the whole House with me when I say that we want to get a worth while and steady growth of productivity over the years. We will only find a long-term solution in the cooperation of all people involved in the task of production. Good human relations and good honest incentives are the real problems to tackle if we want to stay competitive in this difficult world. What contribution can the various matters mentioned in this Motion make towards this task? What action ought the Government to take?
There is just one point here with which I should first deal. My hon. Friend the Member for Somerset, North seemed to think that the Government might take some initiative in this matter, although he realised that it was not suitable for legislation. He asked me to throw a few bricks whenever we thought it necessary. On the whole I prefer action to inquests and recriminations.
Just as a good employer gives a lead, so the Government's duty is to give a lead and encourage better relationships. My hon. Friend mentioned the railway situation. I had a chance yesterday to throw a few bricks, but I did not think it was the right thing to do. I certainly did not do it.
It is no use having inquests on these matters and traversing the past. What one has to do—and what I tried to do yesterday—is to give a clear lead towards a rapid improvement in human relationships, efficiency, and productivity. This is far preferable to having a great inquiry or inquest that would inevitably block all progressive action.
It is important to make clear the Government's position in this debate. I do not want to shelter behind vague statements but to say that the Government will try to give a lead wherever they can in fiscal and other matters. But we do not believe in legislation on this subject, nor in too much exhortation or recrimination. That is not the right answer.
I should like to say a few words about the "workers' charter" to which the hon. Member for Bolton, West (Mr. Holt) spoke. When one is in Opposition, I think it is right to produce charters and documents. It is a good way of stimulating public opinion. But when one is the Government, one has to be prepared to carry them out. This is not a suitable occasion to discuss what we have carried out. We have implemented all our principal beliefs in many of the things we have done.
I now come to some of the specific points raised in the debate. The first is that of co-partnership. I quite agree that it is not always clearly understood. Different people have differing ideas about its meaning. I agree with the view that if it is regarded as a direct incentive to

production, it will be very disappointing. If one just introduces co-partnership because production is dipping a bit, one is going to be both disappointed and carrying out a useless exercise.
Consultation with management is already arranged by the normal channel of effective joint consultation. If we then do not believe that co-partnership is a direct incentive, what do we believe it is? It is a coping stone on top of a proper structure of good relations and consultation, incentive or bonus schemes, and a pension scheme. When one has all those things, then the coping stone is co-partnership.
Imperial Chemical Industries was mentioned. That firm recently introduced a very large co-partnership scheme. I believe it conceived it with the idea that, on top of the good industrial relations the organisation enjoys, it could put co-partnership. In introducing the scheme, one of the directors said:
It will provide a firm basis for better understanding not only of what the company does but of the whole industrial process.
That is what co-partnership should be.
That is the advantage of a co-partnership scheme. It is certainly not direct participation in management. But it is a very valuable lead towards work-people understanding the problems of management and the financial make-up of their firm. If we believe in private enterprise, as I certainly do, then we ought to make a greater attempt to educate the workers in a plant about what it all means. I believe that co-partnership has great work to do there, quite apart from its direct benefits. So far as Government can, we will certainly encourage co-partnership schemes.
Before going on to deal with some of the questions which I was asked, I want to speak about the wider issues of incentives and about the trade union part in these matters. Some people feel that the trade union movement even today must be opposed to what we are discussing. The very reverse is the truth. With full employment and a strong and efficient trade union movement, they have nothing to fear from the introduction of new methods, new systems, and new machines.
I should like to congratulate the Genera] Secretary of the T.U.C., who said:
Today there are thousands of key personnel in our factories who have no fear of a scientific study of their job. They have confidence in handling the manager's proposals to introduce work study because they have been trained to know what he is talking about and to come back when necessary with ideas of their own.
That is the right attitude from the trade union side.
I certainly congratulate the T.U.C. for all the work it is doing towards the understanding of managerial techniques and methods; understanding of what co-partnership means, what incentives, pension schemes, and so on, mean. It is encouraging for the Government to see that work going on. I hope that, if it can, the T.U.C. will do even more.
What can my Ministry and the Government as a whole do to help in this work? We certainly accept the Motion, subject to the qualifications—and they are not very serious—which I must make if there is to be no doubt about what we mean. It is not our task to force industry into one kind of scheme or another. It is not our task, nor our wish, to force on industry any further forms to be compulsorily completed, giving information about one scheme or another. Industry already fills in enough forms.
What are we doing to try and foster the general ideas behind this Motion? Some hon. Members may have seen when it was in the House, an exhibition on works information. That exhibition is now going around the country. It shows the right way of explaining to employees how schemes of this kind operate, and how they benefit them as individuals.
On the more practical side, the Department of Scientific and Industrial Research and the Medical Research Council have set up two expert committees to carry out an elaborate programme of research into the general field of incentive payment schemes. When these committees have reported back, their findings will also be considered by the National Joint Advisory Council.
I must say a word about pension schemes, because the Motion asks us to try to collect more information about those as well as about co-partnership schemes. We are doing some work in

that respect. Through the National Advisory Committee on the Employment of Older Men and Women, over which I have the pleasure of presiding, we are at the moment conducting an investigation into pension schemes.
When we realise that today probably a million people are drawing pensions from their employers and a further 7 million are acquiring these rights, we see what an important factor the employer's pension scheme is nowadays in our national economy. The House will also remember that the Phillips Committee suggested that more information should be collected about employers' pension schemes. The Government are examining that recommendation.
All these schemes are to be welcomed as examples that an employer today has a much wider responsibility than that of merely paying his workpeople what he regards as a satisfactory wage. For example, the British Motor Corporation has recently laid out a very large sum of money to provide the basis of a retirement benefit and life assurance scheme for its employees. That is all to be welcomed.
My hon. Friends went further and remembered, quite rightly, that before the war my Ministry collected and published information about various kinds of co-partnership schemes. We stopped doing that because during the war we had so many other things to do. After the war we looked at the question again. The Ministry was then very heavily engaged with National Service and other tasks which we did not have before the war, and, in part, the work done by the Industrial Co-partnership Association and the British Institute of Management was filling the gap.
I see the force of the argument which has been put, however, and I will certainly undertake very carefully to examine the whole position to see whether it is possible for the Ministry to start publishing this information again. But any action just cannot be based on some legal obligation on employers to provide the information. If we can find some voluntary way of getting the information, we will certainly undertake to see what can be done.

Mr. Gower: I am grateful to my hon. Friend for what he has said. Will he also examine the possibilities of including


available information about pension schemes and so on?

Mr. Watkinson: Yes, I have already said that we are examining private pension schemes—and the results will be published. I think that to some extent we have met the points raised by my hon. Friend.
The hon. Member for Bolton, West and others said that this is a two-part debate. Despite what was said by the hon. Member for Nottingham, South, who is not in his place, I still think that the human relations side of this question is very important. What we must not do is to block someone's good idea—as my hon. Friend the Member for Rutherglen (Mr. Brooman-White) said—and frustrate them by making it too difficult for them to clear the fiscal hurdles.
Before I came to the House today I had the pleasure of a talk with the Financial Secretary to the Treasury. We have already looked at this matter from the point of view of the fiscal implications. My hon. Friend agreed that I should say that we will undertake to look very carefully at the point raised by the hon. Member for Bolton, West and my hon. Friend the Member for Rutherglen to see whether we can clear away any difficulties. I cannot go further than that. I do not know that I am prepared to put compulsion on the Chancellor to read this debate, but I will do what I can to discuss these matters and to see whether we can make some progress there.
I would sum up by saying that I think all my colleagues and I have very clear ideas of what we want to do on this front. We want to see a prosperous, expanding economy which rests on the firm notion in people's minds that they have a share in prosperity. If the economy expands they for their part—because they bear some responsibility for it—will also share in it. Whether they share in it through a pension scheme, or incentive or co-partnership scheme, or indeed the whole lot, does not matter very much so long as they are clear that they are both sharing and getting a fair share of the national product.
That we are determined to try to do, but we want to do it in an expanding, free economy. And that is where we differ from my right hon. and hon.

Friends—if I may call them so during a Private Members' debate—on the other side of the House. The right hon. Member for Rochester and Chatham said that we were too near history to see whether their conception, the welfare conception, the nationalisation conception, was a powerful incentive and driving force, or not. Perhaps we are also too near to history to see whether our idea is the right answer. Being a rather middle-of-the-road sort of chap, I should say that in the end it may be we shall get an odd mixture between the two. But I think the House is agreed that this Motion is a good one, which has been very ably proposed and seconded, and the Government welcome it.

2.27 p.m.

Mr. Graham Page: I add my congratulations to my hon. Friend the Member for Barry (Mr. Gower), not only on his choice of subject, but on the very interesting way in which he introduced it and for the very satisfactory statement which his Motion has drawn from my hon. Friend the Parliamentary Secretary. If this debate has done nothing else than dispel misconceptions about co-partnership, it will have served its purpose, because undoubtedly among employers and employees outside—if not in this House—there are some very serious misconceptions as to what is meant by profit sharing and co-partnership schemes.
Perhaps one of the greatest of the misconceptions was mentioned by the Parliamentary Secretary. It is that any form of co-partnership scheme will be a direct and immediate production incentive. That is not so. Very often employers think that is so and wrap up a Christmas-box scheme as a co-partnership scheme, merely distributing bonuses at the discretion of the employers and calling that co-partnership. It is not surprising then that the employees feel they are being goaded to higher production without any increase in wages. From that point they are in opposition to the scheme, thinking it merely a trick upon them. Possibly even that sort of bonus scheme has its long-term effect on productive effort, but if the employer in such case is looking for an immediate incentive, it would be better if he looked to weekly and contract piecework bonuses and payments of that sort.
Another misconception which has been mentioned in the course of the debate is that a co-partnership scheme will undermine the trade unions. There certainly are employers who have adopted co-partnership schemes with that very idea in mind and there are employees who quite properly have objected. I speak with some little experience in drafting these schemes for employers, and I know from observation of their attitude when they come first for advice on the scheme that they misconceive the whole purpose of the scheme.
There are too many spurious co-partnership schemes in existence which detract from the value of the co-partnership principle. They miss what I conceive to be two very important purposes of co-partnership, if not the most essential purposes. One is the encouragement of saving and investment, and the other is to put those who contribute by their work upon a footing that is seen to be comparable with those who contribute by their capital. I should like to consider the first of these points—the encouragement of saving and investment—in a little more detail.
Hon. Members will recollect a recent O.E.E.C. report which pointed out that Britain invested only 12 per cent. of its gross national product as compared with 25 per cent. invested by Germany, 22 per cent. by Italy and Canada, and so on in other countries with much higher percentage figures of capital investment than our own. The industrialist's excuse for this, of course, is that taxation is too heavy. My right hon. Friend the Chancellor of the Exchequer's recent Budget concession may have some good effect on that, but even if it is wholly effective, it seems to me to be only a drop in the ocean.
The reason for that is that the source of investment capital has recently changed. It is not now in the company reserves so much as in the surplus income of the wage earners. I call it "surplus income" for want of a better phrase. Let us call it that margin of the wage earner's income which a thrifty wage earner would put aside as savings.
By pensions schemes and by industrial life assurance, that surplus income is canalis ed into institutional funds, such as the funds of insurance companies and other institutions of that type. I am not

sure whether this is a satisfactory and really healthy position, because it gives to the institutional fund a great control over equity capital. As the hon. Member for Bolton, West (Mr. Holt) stressed, there is a necessity for spreading the equity capital amongst the employees. By the fact that their surplus income is now being canalised towards the large institutions, such as the insurance companies, the direct investment of surplus income in productive industry is not occurring. I believe that co-partnership schemes can counteract that tendency. They can guide away that surplus income from consumer spending directly into productive capital investment.
Many of the existing schemes have been mentioned today. I should like to mention one scheme of a Lancashire textile firm, in which payments to employees, termed bonuses, are geared to the ordinary dividend and to the employees' normal earnings. But those bonuses can be allocated to the purchase of shares in the company at par. That is of some benefit to the employee, because the shares stand at a much higher figure on the market. The employee, however, cannot take the capital appreciation of the shares; if he wishes to dispose of them, he does so to the trustee of the fund at par. The result has been that with 4,500 employees, the company has the use of some £170,000 of the employees' earnings continuously and the employees are receiving dividends of from 10 to 12½ per cent.
Another case of a Midland motor equipment manufacturing firm is of interest in that a Workers' Share Bank has been instituted, the bank holding a block of the ordinary shares. This is not a case in which bonuses are given. The employees are encouraged to make deposits with the Workers' Share Bank, and interest on those deposits varies with the dividend on the ordinary shares, the block of which the bank holds. An advantage of this scheme is that the interest on the deposits can be paid out tax free to the employees who have made the deposits, leaving an employee to include the gross payment in his returns.
Schemes of that sort serve the purpose of skimming off the surplus earnings or income of the wage earner directly into investment in the company by whom he is employed. If the process is associated


with some form of special extra payment, it is of great advantage. I avoid the word "bonus" again; "bonus" gives the idea of a sum that is left entirely at the discretion of the employer, and thus it raises suspicion in the mind of the employee. I would rather see, than the bonus, a definite way of calculating the special extra payment which the employee can be encouraged to put back into a capital investment.
An example of this can be seen in a scheme devised particularly for manufacturing industries. It is based on the principle that wages bear a fixed relation to the value added to raw materials by the process of production. By way of illustration, let us suppose that an article sells for 10s. and that the raw material and services, such as electricity and so on, in the production of the article take 4s. of the 10s. Of the remaining 6s., let us say that 2s. 6d. is for wages. On figures of that sort, the employer would expect that for every £5,000 he pays in wages, there would be £12,000 added value; that is, the relationship of the 2s. 6d. to the 6s. That, under this scheme of which I am speaking, is checked monthly, and it is not a very elaborate accountancy business.
Suppose that in one month, instead of £12,000 added value, thereis, say, £15,000 added value, a £3,000 surplus. That again is divided in the proportion that 2s. 6d. is of the 6s. and £1,250 is paid into the Workers' Share Bank, holding a block of ordinary shares in the company. Part of that is paid out to the workers directly each month. The proportion may be, according to the scheme desired, a half, two-thirds or three-quarters, so long as it is something less than the whole, the employees being encouraged to leave the rest of the deposit in the Workers' Share Bank, and the interest on that, of course, varies with the dividends on the ordinary shares.
I do not think I need to elaborate the advantages of a scheme of that sort. It overcomes any gift idea of a bonus; it makes quite patent that labour is getting a fair share of the added value of the product; it creates an incentive to cut down wastage, at any rate, if not a real incentive to increase production; and it encourages the capital investment of the surplus income. I believe that it is the most satisfactory form of co-partnership

which has yet been devised, although, as has been said many times in the debate, one cannot lay down any particular form to apply to the whole of industry. However, anything that can be done to encourage a sound form of co-partnership coupled with a type of profit sharing which can be seen to be fair, seem to give the labour side a comparable share with those who are using their capital in industry, any form of co-partnership such as that, I am convinced, will not only improve production but will enable a greater expansion of industry to be made and will improve industrial good will.

2.42 p.m.

Mr. F. M. Bennett: In the very few minutes I propose to detain the House, I am not, in view of the very full exposition of the various types of co-partnership and profit sharing already given during the debate, going to spend further time on that. What I should like to stress, from my own study of this problem, is rather the psychological advantages which accrue from trying through such schemes to get workers interested not only in the industries in which they themselves work, but in the industries of the country as a whole, and not only as wage earners only drawing wages from industry.
Earlier in the debate my hon. Friend the Member for Somerset, North (Mr. Leather) mentioned how important it was that what he called industry's three-legged stool of capital, management and labour should have all its legs intact, for otherwise it would collapse. One of the unsatisfactory features of our present economy, which, I think, few hon. Members on either side of the House would deny, is that there still remains some suspicion by one of the legs, labour, that another leg, capital, is getting away with an undue amount of the rewards of industry. We on this side of the House certainly do not agree in general with that proposition, although of course there may be exceptions. I have found on both sides of the Atlantic, when I have been to firms that operate these schemes, that if we can once get the workers interested in profit sharing that may be not only an incentive to them, and I do not overrate that, but, what is much more important, it provides an educational assistance to show them the part that


capital plays, instead of being often completely remote from their understanding, and shows them too how and why it is stockholders draw dividends.
It is a difficult task in a speech to try to differentiate sharply between co-partnership and profit sharing, because, as previous speeches have shown, there is such a very wide variety of schemes in almost each industry that is trying to develop either of them. Broadly speaking, I regard co-partnership as being the system whereby the workers take a capital interest either by way of bonus shares issued to them or by way of subscribing themselves for shares out of their wages or other money to the capital of the firm, and profit sharing more as a system of incentives in the form of additional income varying with the profits of the firm.
I have mentioned the psychological advantages that flow from the workers' understanding of the importance of the role of capital. Both profit sharing and co-partnership have a part to play there, but I believe that co-partnership has additional roles to play which profit sharing has not, according to the interpretation I have just enunciated of these terms. On this side of the House, we have for some time talked about our ideal for the industrial set-up in this country, indeed, the social set-up in this country being a property-owning democracy. I believe that it is within that ideal that co-partnership has a very proper role to play.
I have from time to time to go on business to the United States and Canada. We have heard a good deal today, not always in agreement, about the comparable methods pursued in industry in those countries, but I think that few who have crossed the Atlantic would deny that there is one characteristic which the average American worker possesses to a far greater degree than the average British worker, and that is his desire to be a small capitalist in his own right. He genuinely likes the idea not only of a high income but of possessing a stake in the industry of his country.
We know from experience that that process can be developed too far, as the slump between 1929 and 1931 showed, but, nevertheless, as things are now in the second half of the twentieth century I am quite confident that, apart from

direct incentives, if we want to develop a socially content and prosperous country we need to imbue the workers with a pride in property ownership, so that that is not confined to capital held by a small section collective or individual at the head of each industry.
There is another feature which, I think, is important in co-partnership, and that is the maintenance at the present time of a flow of capital to industry. In previous times this was normally provided by a comparatively small number of rich or moderately well-to-do people in this country. The effect of two wars, of high death duties and of very high current taxation have at the moment robbed to a large extent the industry of this country of that sort of venture capital, and it is undoubtedly a fact that one of the chief problems for industry in the next decade will be to know where its new capital will come from.
It may be said that the amount which workers can subscribe to the supply of capital to industry from which it can expect resultant benefits will be small, but if we take the overall aggregate I think it will be very considerable indeed, if a different frame of mind can be induced amongst them. During the passage of the recent Pool Betting Act I was absolutely staggered to hear what was the amount subscribed annually to the football pools—£75 million. That leaves out all other forms of gambling.
Yet one of the criticisms that I have sometimes heard expressed is that the average worker, unlike the man who reads and studies the "Financial Times," when he puts his money into ordinary shares, can lose it; and that it is unfair to expect him to gamble with his earnings. If that be true of what may happen in the way of a decline in shareholdings, how infinitely more true it is in almost 90 per cent.—of gambles such as where money is lost every week on football pools. If we could drain off only a portion of that money which, by way of horse racing, dog racing, football pools and other forms of gambling, is spent every week, we could find a fruitful and extremely useful source of additional capital for maintaining the industrial efficiency of this country at a high level.
Speaking purely as a Conservative, there is one other benefit which I see


likely to accrue from the encouragement of co-partnership schemes—

Mr. Holt: Speaking, as he says, as a Conservative, will the hon. Member say what is his view of the extent to which the Government have carried out the terms of their Workers' Charter, to which attention was drawn by the hon. Member for Somerset, North (Mr. Leather), and about which the Parliamentary Secretary said that he was willing to defend the record of the Government?

Mr. Bennett: There are two points I should like to put regarding that. First, it is not for me to defend the Parliamentary Secretary, who is not in his place at the moment for reasons which we know. Secondly, may I say that I am going to touch by way of criticism on what I think the Government should do further to assist the schemes which have been put forward.
I have listed the advantages which I should like to see and should expect to flow from the extension of co-partnership schemes, and I was going on to say, speaking as a Conservative, that I believe that the conception of a wider degree of individual ownership, as opposed merely to wages, is the best block to the advance of the Marxist conception that I have ever discovered. When I was in Greece during the Communist aggression from the north, I learnt one thing very quickly. Although rifles and troops played their part in overthrowing that rebellion, one reason why the Communists never made any real headway in Greece was that they had nothing at all to offer to the people they were hoping to convert.
After the expulsion of the Greeks in Asia Minor in 1923, as is well known, the remaining large estates in Greece, with a few exceptions, were split up, and each Greek family got a smallholding. I believe I am right in saying, though I quote from memory, that the largest average holding in Greece at the moment in the peasant area in the north is 10 acres. When the Communists came, they had absolutely nothing to offer. When a Greek peasant said, "What are you going to do for us?" and they said, "Take over the land," it meant that they would take over the peasant's 10 acres, and that was the quickest and most effective bar

to Communism that I have ever experienced.
It may be that the party opposite who, in their earlier—and may I say more reckless—days used to favour Marxism, at least to the degree of a wider extension of nationalisation, seem now—or at least when an election is looming—to have dropped those ideas to some marked extent. The hon. Member for Nottingham, South (Mr. Norman Smith) himself confirmed my impression that Marxism as such is, at least in his mind, no longer a necessary element of Labour thought.
Having now listed the advantages which I can see may accrue from extending co-partnership, I wish to make one other point which has a much wider application. I believe that we should extend the whole idea of ownership by the man in the street. I do not want co-partnership schemes only to mean that workers have the opportunity to participate in the industrial concerns for which they work.
I should like to see the Stock Exchange and the City generally, the bankers, and all others concerned, endeavouring to see how they could encourage workers and make it easier for them to buy shares within the limited scope of their means. Stockbrokers have said that it is hardly worth while bothering with very small blocks of shares, because "there is nothing in it" for them. I have heard that expression used. But I think that in some way or other we must provide more facilities, not only in London but in the provinces, for those who wish to become small capitalists.
In further answer to the hon. Member for Bolton, West (Mr. Holt), I would say that I want the Government to do rather more than was referred to today by the Parliamentary Secretary, though I welcome what he did say. I believe, for instance, that one way to help co-partnership schemes would be by suitable tax reliefs. I do not want the Government merely to clear away any difficulties, but to make it positively desirable for firms to adopt these schemes. I hope that in future conversations with the Chancellor, in addition to discussing the clearing away of difficulties, consideration will be given to methods to make it financially advantageous to firms who encourage their workers to share in the capital as well as the dividends of the firm.
Another point which may well be worthy of consideration is whether the Stamp Duty on share transfers could either be reduced or abolished for purchases and sales below a certain amount. If the Government are really keen on helping in fact as well as in spirit, those are proposals which might be adopted.
I have found this debate informative and useful, even at times amusing—if I may refer again to the speech of the hon. Member for Nottingham, South—and I thank the Government for going as far as they have in accepting this Motion, though I believe that much more still could be done.

2.58 p.m.

Mr. C. N. Thornton-Kemsley: I make no apology for intervening briefly at the end of this very useful debate. I suppose that I am the only one who has spoken this afternoon, and probably one of the few hon. Members of this House, who is able to declare an interest, in that I am proud to hold a number of shares in a very prosperous and expanding concern which came to me as part of my share in the profitability of that concern through the operation of a co-partnership or partnership scheme. I will refer to that a little later.
I agree with the hon. Member for Small Heath (Mr. Wheeldon) and other hon. Members who spoke earlier that the whole conception of co-partnership, or, as I prefer to call it, partnership, in industry is very much greater than merely profit sharing. Profit sharing forms a part of it, but only a small part. If I were asked to define the meaning of "partnership in industry," or "co-partnership in industry," I would say that it is an attempt to raise the status of the worker in the industry by giving him a share in the ownership and prosperity of the concern in which he works, and by giving him a right to be informed about the operations of the business and to have a share in its management.
The methods of doing this vary, as more than one hon. Member has said. There is no blueprint for a partnership or co-partnership scheme, which inevitably means that every employer of labour who is contemplating the introduction of a new scheme is, in a sense, a pioneer in an uncharted field. Nevertheless, the various schemes have certain desirable features

which are easily recognisable. The first is that the sharing of profits must be done upon a pre-determined basis, worked out and agreed in advance. The haphazard distribution of bonus shares at Christmas time, or at some other time, when it is obvious that the firm is doing well, savours far too much of patronage and far too little of partnership.
A usual provision of such schemes, nowadays, is that where profits exceed the amount required to pay a dividend of a certain amount—again determined in advance—on the ordinary share capital of the business, the excess shall be divided equally between the shareholders and workers in the business. That is not necessary to any partnership scheme, but it is a very usual and useful facet of such a scheme. Other normal provisions are that generous arrangements should be made for social security, welfare facilities, collective amenities, and so on; that there should be reasonable security of tenure for the workers—certainly that they should have a right of appeal against dismissal—and that the scheme should be embodied in a deed to which all parties are party.
However great may be the variations of different schemes which are in operation at present, the one thing which is common to all is the spirit underlying them. It is the spirit which recognises that man does not live by bread alone, and that he is very much more than a cog in someone else's machine. Some years ago the late Dr. James Bowie, who was at one time the Principal of the School of Economics of Dundee, told me about a remarkable example of co-partnership in a small firm. Many hon. Members have spoken about large concerns, but I want to mention this small firm because it is typical of what can be done by enlightened management. The firm concerned was that of Harry H. Payne, Ltd., shoe repairers, which had about 100 small shops in and around Birmingham. Dr. Bowie came in contact with Harry Payne and heard a good deal from him about his business. He was surprised to hear Mr. Payne say "The only trouble about my workers is that they work too hard." That seemed to be such a remarkable statement that Dr. Bowie sent an experienced investigator to live in Birmingham for three months and make inquiries of the workers in this concern.
That investigator found that although the wages were considerably above the statutory minimum for the trade, and although there was a generous profit-sharing system, the incentive was neither of those things, but was due to the fact that the workers liked "the boss," as they called him, so much. He took a personal interest in them. He moved from shop to shop, and knew all the workers by their Christian names. They were able and glad to do this extra work, and it was a remarkable example of the beneficial results that can flow from a friendly atmosphere and good will in the shop.
Perhaps some hon. Members will remember a story told by Lord Trent of an Italian industrialist whose works were visited by a British politician, who asked him whether industrial relations in his works were good or not. The industrialist replied "Ecco, signor; we have motored all round the works, and not a single shot has been fired at us." Fortunately, in this country, industrial relations are good, whether that is due to good employers, to profit-sharing schemes or whatever else it may be.
At the outset of my speech I declared an interest, because, since the war, I have had the privilege of advising the John Lewis Partnership on property matters, and I sit on one of the boards of that concern. That, I suppose, is one of the larger examples of producer co-operation, and one which has been in operation for some 40 years. The basic idea is that the lenders of capital receive a reasonable fixed rate of interest on their investment—as a matter of fact it has been for some years rather under 4½ per cent. on the whole of the £12 million of capital invested in the John Lewis group—and all the rest, after making the usual provision for reserves and for ploughing back into the business to increase productivity, goes in one form or another to all the workers—partners, as we like to call them—in the partnership.
It goes back to them directly in the form of a general bonus in proportion to the remuneration of the workers concerned, and indirectly by giving individual advantages and collective amenities, non-contributory pensions schemes, sickness pay, family allowances, the subsidising of

concert and theatre tickets for partners and the provision of country clubs and benefits of that kind.
What is interesting to me is not so much this division of profits as what I have found to be the unusual length to which the partnership goes in order to give absolutely unfettered freedom of speech throughout the whole organisation, both through its journalism and through the democratically elected council. The hon. Member for Small Heath said that he did not know of any concern which had the power of appointing members to the board. As a matter of fact, the John Lewis Partnership, through its elected central council, which is the parliament of the partnership, has the right of nominating five members to the central board—five out of a total of 11 members are elected by the central council. These various devices ensure that all the partners have the fullest opportunity of acquiring knowledge about the concern and of making their own ideas known.
I did not intend to make a personal speech, and I will conclude by making this point. To start a scheme in which part or the whole of the profits go to all the workers who contribute to them necessarily requires a willingness on the part of the owners of capital to surrender the right to receive part, at any rate, of the profits of that concern. Some will do so, and some have done so, from disinterested motives. But I think that rather more will want to satisfy themselves, and will necessarily require to satisfy their shareholders, that it will be good business to cast their bread upon the waters in this way.
Can it be shown that a man will work harder if he is given a share in the management and the profitability of the business for which he works? Every soldier from Cromwell's russet-coated captain to Field Marshal Montgomery's Eighth Army veteran knows how much harder he fought because he knew what he was fighting for. If in the industrial field we add to knowledge about business a direct personal interest in its success, what response shall we get?
While it is true that in productive industries there have been some remarkable examples of increased production


following the introduction of profit-sharing and co-partnership schemes, I think it true to say—one wants to be honest and to face this thing clearly—that experience tends to show that there is not any great incentive value in an occasional distribution of bonuses in profitable years. But it is also true to say that the incentive value increases proportionately where more frequent, though inevitably smaller, bonuses can be related to good spells of hard work.
The incentive value, I suggest, lies rather in the tendency, referred to by my hon. and gallant Friend the Member for Bedford (Captain Soames) arid referred to publicly by Lord Bruce of Melbourne, for a concern which practises profit sharing and co-partnership to atttract to itself the better workers. I think that is undoubtedly true.
It lies in the combined effect of the different aspects of partnership schemes, the sharing of profits, employee shareholding, the welfare and superannuation schemes, the frank discussions which take place at all levels between the management and the workers, the joint consultation and the joint conciliation councils, and so on. These and, most powerful of all, the status of partnership—with all that it means in terms of human rights and dignity—are the source of an attitude of mind from which flows, as clearly as night follows day, the greater diligence, the team loyalty, the happy atmosphere, and the pride of work which invariably leads to increased efficiency and higher output.

Question put and agreed to.

Resolved,
That this House is impressed by the social, industrial and economic benefits which accrue from co-partnership schemes, pension schemes and other similar schemes in industry; takes note of their extension in recent years; and urges the Government to take steps to equip itself with comprehensive information about them, and to consider how it can remove obstacles which may impede the introduction of suitable schemes, in appropriate industries and trades, on a wider scale.

ELDERLY SICK

3.15 p.m.

Mr. Hector Hughes: I beg to move.
That this House is greatly impressed by the inadequate provisions which now exist for the elderly sick and strongly urges the Government to take immediate steps to increase, improve and extend those provisions.
I shall deal mainly with the health visitor service because members of that efficient and noble service are insufficiently paid and overworked, and the service is undermanned. I invite the Government to do something about it. For many years I have been pained and shocked by the insufficient provision made in actual practice for the visiting of the elderly sick. There have been statutory improvements, but they have not been fully utilised.
It is not sufficiently remembered that the old of today were the wealth producers in peace and the defenders in war of this great, rich, and civilised country. As such, in their old age, they are entitled to just as full an access to the amenities and to the wealth which they produced and defended as when they were actually producing or defending these things. The old, and particularly the aged sick, ethically have a right to the care and attention of their successors who are today enjoying the heritage handed to them.
I should declare an interest, because for many years I have been a member of the Board of the Church Army. I have been greatly impressed by this problem, and so I have been at pains to prepare my argument and to put it as clearly as I can. In doing this, I want to place on record the generous help which I have received from great humanitarian organisations, including the Church Army, the London County Council Health and Welfare Service, the Scottish Council of Social Service, the National Old People's Welfare Committee, and the Old People's Homes Committee, all of which are doing noble work.
I desire also to pay tribute to my hon. Friend and colleague the Member for Tottenham (Sir F. Messer), to Dr. Ian MacQueen, medical officer of health for the City of Aberdeen and to Mr. C. S. Petheram, of the London County Council.


These people and organisations are all enthusiasts for health and welfare, and the tasks which they carry out could not be fully discharged without a keen sense of vocation and unremitting devotion.
This problem presents a striking paradox. Hospital accommodation would be adequate, quantitatively at least, in most areas, if the local health authorities developed their preventive services and domiciliary care services to the full; hence, with some exceptions, the regional hospital boards are unwilling to contemplate any large increase in the number of beds for the elderly. Local health authorities in general have not developed their disease-preventive services sufficiently, and this failure leads to a steady increase in the waiting lists for hospital beds. Many local health authorities, instead of putting their houses in order, simply blame the regional hospital boards for not providing more beds.
A most important feature of the health problem is that of bringing the full number of health visitors into operation. Their salaries, pensions, and general conditions should be so greatly improved as to encourage more recruits into that profession, which would enormously increase their numbers. I quote from the Scottish Health Services Council's Report on "The Ageing Population." It says:
It must be emphasised that the problems of the medical care of the elderly portion of our ageing population are more domiciliary than institutional, and are more problems of social medicine and of medical administration than of clinical medicine. The essence of the matter is to assist elderly people to remain for as long as possible in health and comfort in their own homes. Hospital care and hostel or other accommodation for the infirm aged, though necessary, are only supplementary measures. The stress must be laid, not on hospital geriatrics, but rather on what can be done to stimulate eugeria—the condition of ageing serenely, slowly and painlessly.
I agree with this diagnosis, and in order to present the needs of the elderly sick in a scientific and orderly way, I shall do so under three heads: one, that of warding off the onset of debility due to old age; two, attending the sick at home; and, three, attending the sick in hospital.
I do not at this hour intend to speak at great length, and I want to clear the ground of some matters on which I should have liked to speak if the debate had started earlier. First, I mention some

things which affect those not ill; which help to keep the elderly out of hospital, to ward off the onset of debility due to age, and to maintain health and reduce disease.
I put them in schedule form for the sake of celerity. These include improvements in retirement policy, adequate pensions, appropriate housing, the health visiting service, chiropody treatment, the mobile meals service, the home help service, clubs for the elderly, geriatric clinics, registers of persons likely to need help, and a combination of health and welfare service.
I merely mention those, and I pass to the second head. I must mention the things which are needed by those who are ill but not ill enough to need hospital treatment. These include improvements in the district nursing service, the home health service, assistance by relatives, interchange of information between hospital and local authority staffs, and the after-care of those discharged from hospitals and hostels for the frail.
The third head relates to matters affecting the elderly sick actually in hospital, and includes the extension of hospital accommodation, proper use of hospital beds, and more up-to-date amenities and utilities. Obviously I cannot deal with all those now, and therefore I shall, perhaps to the relief of the House, concentrate on one—the warding off of debility due to age; that is the maintenance of health and the reduction of disease in the elderly.
In my submission the key to that is the health visitor. It is obvious, with the vast continuing increase in the numbers of the elderly, that a reduction of disease is essential in the interests of the whole community, young and old. Unless we can so improve health and fitness that a man of 70 remains as active and as useful as his father was at 60, our whole national economy may be swamped by the rising tide of the elderly sick.
The clear implication is not that we should retreat from our obligations of welfare for the old people but that we should make a real and sustained effort to improve health and to prevent disease in the older age-groups, in addition to providing for the comfort and welfare of those no longer capable of looking after themselves. We must help them in


their homes. We must help them to keep out of hospital, and that is where the health visitor is the key. In common humanity, we must help those who have become incapable of fully independent existence, and let us also be vigilant to prevent those who are still fit from descending needlessly into the stage of unfitness.
How is this to be done? There are many answers to the question and I wish that I had time to give them. Today my one answer will concentrate on the enlargement of the health visiting service, which is below standard in numbers. Gaps should be filled, standards should be raised, the salaries should be increased, the pensions and general conditions should be improved, because this is an essential service affecting the vitality, the mortality, and the happiness of the whole community. The health visitor is the key worker in the disease-preventing service. In the phrasing of the Royal Sanitary Institute,
She is the spearhead of the social services.
The official Report on "The Ageing Population" states:
The sphere of work of the Local Health Authority has been extended to include the prevention of disease (not merely of infections) among all ages (not simply among children). An outstanding contribution to the undoubted success of the Child Welfare Service has been made by the public health nursing staff. By their training and experience, health visitors are well fitted to contribute to the well-being and comfort of people at the other end of life. We recommend that the Local Health Authorities examine the possibilities of extending the sphere of the health visitor staff to deal with the needs of the aged and of increasing their quota of health visitors as and when these become available.
The rôle of the health visitor is the health care of the elderly.
The best analysis published on this vital aspect is probably an article by Miss D. J. Lamont in the "Medical Officer" of 24th September, 1954, which I ask the Minister to study and act upon. I have not the time to quote from it today. Meantime here are some points to emphasise the great importance of the health visitor. For the prevention of disease and for the promotion of health in the elderly, the health visitor has unique qualifications. I name four.
First, her nursing training and hospital experience make her aware of the degenerative conditions that accompany age. Second, her training in public

health enables her to realise the importance of delaying for as long as possible physical and mental deterioration. Third, her constant association with normal families gives her an unsentimental and practical outlook. Fourth, she is already accepted in the home as a welcome visitor and adviser who, unlike other medical and social workers, does not have to delay her visit until summoned in time of emergency.
The health visitor can and does help in many ways in this connection. She can and does reawaken the interests of the middle-aged women who have hitherto been preoccupied with young children, and who sometimes tend to drift into premature old age when the children no longer need care. She fosters the development of outside interests and leisure activities as an armour against the dreariness of old age. She maintains and promotes physical health by advice on diet.
It is well known that many old people eat too much and do not take enough exercise. When activity is lessened they continue, as regards diet, the habits of youth. Hence they suffer from obesity and coronary troubles. Many others find cooking wearisome and subsist on the "tea and toast" type of diet—hence lowered resistance to infections. They need advice on a proper balance of diet, rest, and exercise. Some try to behave as though they were still young, and they have sudden heart attacks in consequence, or they regard themselves as less fit than they really are and thereby cause needless invalidism.
The health visitor can and does help in those ways, and also in other ways. She helps to maintain morale and cleanliness by her visits, and sometimes these make all the difference between the dear old gentleman and the dirty old man. She can and does help in the prevention of home accidents. This is just as important in the case of old people as in the case of young children, though causes and types of accident are different. The skilled health visitor can do an enormous amount here. She can also help in the maintenance of mental and emotional health by raising morale, alleviating loneliness, removing the prevalent fears of death, of poverty, of illness, and of being unwanted.
She can help in co-ordination of services by bringing to the notice of the mobile meals service the old lady to whom cooking is now a weariness; arranging for a home help for the woman whose failing physical powers can no longer match her pride in the spotlessness of her home; assisting the old man in dealing with the complexities of pensions and allowances; and persuading the person who is ill but reluctant to summon a doctor that medical treatment is necessary.
I turn to another aspect of the virtues and activities of the health visitor. Research is of course, an essential service. We get knowledge of the prevention of diseases from the study of established cases in hospitals and from the study of cases by general practitioners, but also from the health visitors who are experts in normality and skilled at recognising early deviations from normality. We can expect from them useful new knowledge on which to build social policy for the future.
I turn to another aspect of the matter. The National Health Service Acts are not fully utilised in this respect. They impose on local health authorities a duty to provide health visitors to visit persons in their own homes, and to advise, to quote the Acts,
as to the measures necessary to promote health…
and so forth. An adequate health visiting service could do much to improve the health of the community and to reduce the present crippling cost of hospital care. The sad fact is that the health visiting service remains in many areas in almost skeleton form. I invite the Government to do something about that.
The present scarcity of health visitors places on the comparative few unduly heavy case loads. This scarcity is infinitely greater than the scarcity in any other profession. Before 1948, when health visitors were concerned only with expectant and nursing mothers and young children, the standard case book was 100 to 120 births per health visitor per year. With a normal birth rate of 16 to 17 per thousand of the population that represented a pre-1948 loading of one health visitor to every 6,000 to 6,500 of the total population.
With the extension of the health visitors' duties it is quite impossible for her to cover a population of more than 3,000, and many experts have publicly advocated smaller case loads. The Department of Health for Scotland, in its official Health Bulletin, over the signature of the Deputy Chief Medical Officer, has suggested that the minimum for adequacy is one health visitor for every 2,500 of the population. Professor Fraser Brockington, of Manchester University, has argued for the same number of health visitors as of general practitioners, and that is roughly one for every 2,200 of the population.
Sweden has vital statistics showing high standards of health there. She certainly has no better hospital services than we have. Sweden has far fewer medical practitioners per head of the population, but considerably more generous staffing of health visitors and district nurses than we have, and that is reflected in her vital statistics.
Every local authority in Britain is short of health visitors, although in many areas the shortage is masked by the fact that the local authority has not increased its establishment of health visitors. In Aberdeen, where we have increased our complement, we have 25 vacancies in a total complement of 85 health visitors. The national shortage is at least 30 per cent. and probably nearer to 50 per cent.
Local health authorities that try to obtain an adequate quota of health visitors find that recruits are scarce, and the reasons are not far to seek. I shall mention some of them. High among the reasons is that health visiting is the only profession in which full-time study for obligatory additional qualifications is followed by an actual diminution in pay. What an anomaly; what an anachronism.
The health visitor, like the hospital ward sister, starts by undertaking general nursing training for three years. She then works as a staff nurse for, say, two years. The ward sister needs no further training or experience, whereas the intending health visitor spends a further 1½ years in midwifery and health visiting. Before 1948, health visitors were paid a little more than hospital sisters. But since then the positions have been reversed, and so continue.
The ward sister today receives a salary of £425 to £550 a year. The health


visitor, on the other hand, with two extra qualifications, with the responsibility of working unsupervised in the homes of people, and with the unpleasantness of having to be out of doors in the most inclement weather, receives only £420 to £545 per annum.
Again, health visiting is one of the few professions in which virtually no promotion outlets exist. For every four or five ward sisters there is at least one senior post to which they can aspire. In health visiting, on the other hand, there is about one senior post for every 25 or 30 health visitors. Also, the senior posts are woefully underpaid. The health visitor tutor with yet another qualification, the Tutor's Certificate, requiring another year of full-time study, that is, with a total training longer than that of an ordinary doctor, receives £560 to £660 a year.
The salary of a principal health visitor tutor, and there are only six in the United Kingdom, rises to a maximum of only £760 a year. Contrast this with the salaries of lecturers in teacher-training colleges, which are comparable posts. Even a junior female lecturer gets about £800, and a male over £900 a year; and the person in charge gets about £1,800 a year. A superintendent health visitor receives, according to the population, a maximum varying from £635 to £915 a year.
But the salaries of matrons in large hospitals rise to over £1,100 a year, and an assistant dental officer in a local authority gets a maximum of £1,400 a year. The health visitor is the key to the prevention, or warding off, or delaying, of disease in elderly people. The reasons for the shortage in this great and noble service are those to which I have referred.
There are other keys on this humanitarian chain which I cannot detail at this late hour, and earlier I mentioned only some. Among the other keys is the chiropody service. If there is one thing from which many of the aged suffer it is bad feet. It is essential that they should have a better chiropody service. They need a mobile meals service, home help service, clubs for the elderly, geriatric clinics, and a register of old persons likely to need help is required.
These are but a few keys on this very important chain. I hope that I have con-

vinced the House, particularly the two Ministers who are listening to me, that they are very important keys, but the most important key of all is the health visitor. Her emoluments and conditions should be improved to attract greater numbers into this essential, humanitarian profession without which the old will continue in bad conditions which they do not deserve.
I hope that I have said enough to convince the Ministers that it is urgent that something should be done in order to improve the attractiveness of the health visiting service, and to increase its numbers.

3.42 p.m.

Mr. Somerville Hastings: I beg to second the Motion.
I shall probably deal with this matter from a rather different angle than my hon. and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes). So long as two old people are living together they usually manage pretty well. Each helps the other in sickness and cheers and encourages the other in health. But the number of people living alone is increasing. Between the 1931 and 1951 censuses it doubled. There are at least 500,000 people more than 40 years of age living alone in this country. When old persons living alone become ill their condition often becomes most deplorable. They cannot go out to buy food, and often they suffer very much in consequence. They find difficulty in keeping themselves clean, and their condition is very dreadful. It can only really be appreciated if it is seen.
It is difficult to understand how such things can happen in a civilised country, because we have health visitors and other facilities, but I think these old people do not understand the facilities available to them. Above everything, they dread being taken to hospital. I know that local authorities have power of compulsory removal, but they have first to discover the old people. Therefore, I suggest to the Ministers that the first thing to do is to improve the services for finding out when old people—particularly those living alone—are ill and need help.
There are four possibilities which have to be explored and extended. In many areas there are preventive clinics for old people where they have physiotherapy, are encouraged to do exercises and play


competitive games which they thoroughly enjoy, and where they are taught to do interesting work of different kinds suitable to their capacity. When the old person does not turn up at the clinic it may suggest to those in authority that they may be ill. In other areas, I understand, a register is kept of those who are 65 and the health visitors visit them at regular intervals to see how they are getting on. I know that in at least one place the youth club has left with old people a card which they put in their window if they need anything, and this idea has been used to some extent with modifications in other places. Then, when old people are ailing, kindly neighbours or health visitors look in to see them night and morning.
In my view, what we want to do for old people above all else is to keep them out of hospitals if we possibly can. Old people do very badly when they are moved to hospital. They often seem to die from some inexplicable cause. In this House, I have given examples before that have come to my direct notice where, in spite of every care, old people when removed to hospital have suffered badly. Therefore, what we must do as far as possible, is to maintain the health of the old people. I know that the chief difficulty arises when they live alone, but we should try to prevent them getting ill and, if they do get ill, deal with them as far as possible in their own homes.
First, I suggest that the way to keep old people, like the rest of us, healthy is for them to be kept busy. Old people like to be occupied. Dr. Sheldon, of Wolverhampton, who has written a great deal about the ills of old people, tells us that he regards them as not unintelligent, and he says that they have a great deal of what he calls "guts." The most important way to keep old people healthy is to keep them busy and to give them things to occupy their minds and their muscles.
In the past, too often when an old person became ill he was removed to some form of hospital and put to bed, and there he lost all interest in life and all hope. Too often he was tucked up tightly in bed, with the bed clothes so tight that he could hardly move and certainly could not keep warm. The result was that he bent up his knees to

keep his feet warm and got more or less fixed in that position. Then, as there was nothing else to interest him, he was inclined to eat too much; and having lost interest in life and all hope, he did not bother about much else and incontinence soon followed.
The first thing to keep old people healthy is to maintain their interest. One of the best things in the National Health Service is that old people have been able to get spectacles really fitted to their sight and have not just used what was left them by a grandfather or uncle or aunt. Even more important than that, in my experience, has been the provision of hearing aids. Several old people have told me that this has meant new life to them, because instead of being cut off from everyone else, they were able to communicate with their fellows and get some interest in life. After all, old people are gregarious. I would even say that they are often garrulous. Anyone who is in doubt about this should go to an old persons' club and not only see them, but hear the noise they make and the way they enjoy themselves. We should keep the old people busy in body and mind.
The next thing is to try to avoid stairs. Old people do not get on with stairs. Therefore, what I want to see is more one-storey ground-floor flats built in housing estates for old people. Would it not be possible to give preference in the allocation of such ground-floor flats to old people who have daughters or granddaughters living near? Thus they could get the help they very much need. I know that there is such a thing as tyranny of the sick, and I know that the daughters and granddaughters who are helping to look after old people often find it difficult. In some places it is possible to arrange for home helps to spend the night once or twice a week with the old people so as to relieve the daughters. In order that the family may get away for a while, it is sometimes possible to take the old person into a hospital temporarily. Then that, in my opinion, is a very great help as well.
When old people get ill there comes the question of bringing the hospital to the patient instead of taking the patient to the hospital. We have, as has been shown by my hon. and learned Friend, the very valuable services of the health visitors


and the services also of the home helps and the home nurses. Many local authorities lend various articles of nursing equipment to the old people when they want it, such as water beds and corn-modes, and I know of at any rate one local authority in London that adopted some years ago a scheme for providing baths for old people in their homes. A bath is taken to the home, and also a boiler worked by Calor gas.
There are meals on wheels, and other schemes which take hospital facilities to the old people in their homes. A very great problem, of course, is bedding, and that is sometimes lent, and the washing of foul linen is a very great difficulty, but it is not insuperable, and arrangements can be made and have been made for this in some places between the local authorities and the laundries of hospitals.
What I would stress is that although the provision of facilities is costly to the local authority, it is infinitely cheaper to the community than taking an old person into an expensive hospital, and the old person is happier and is much more likely to benefit by treatment at home. The doctor in charge of the case may feel that hospital treatment has to be considered. Some hospitals, with which I used to be associated, would send out a geriatric specialist who would consult with the doctor in the home. Between them they could judge of the conditions in the hospital, the facilities available, the pressure on the hospital beds, and in the light of all the facts arrangements could be made. Sometimes a health visitor accompanied the doctor from the hospital.
The time left for the debate is, I know, very short, and there are many more things one could say and would like to say, but there is not time. These are a few suggestions for the care of old people. I for my part do not believe that we shall have an efficient service for old people until the competition between the different authorities for health is removed and until in every locality there is a single health and welfare authority.

3.55 p.m.

Mr. J. K. Vaughan-Morgan: We have had two very interesting speeches which have ranged widely over the welfare of old people generally. I had anticipated that we should deal more with the narrow point of the elderly sick,

such as matters concerning the shortage of hospital beds for the chronic elderly sick, about which I wish to say a few words.
Last week I visited a small hospital in my constituency which has been greatly affected by this matter. This hospital has been ordered, told or advised—I am not sure which—to allocate 10 per cent. of its beds for the chronic elderly sick. In a large hospital it is possible to have a separate ward for the elderly sick where they can have what most of them need, which is less nursing than is needed in the average ward and the proper services. In a small hospital matters become much more difficult, and the problem has hit this hospital very hard.
They have had to allocate 12 beds out of 120 scattered over the various wards. Appalling complications have been caused. Of the 12 elderly sick in the hospital, no fewer than six need no nursing at all. Were there a half-way house they could be looked after there. I have gone into these cases individually. I was given the full circumstances affecting each patient. I am sorry to say that in three cases there were relatives who did not want them back. These three patients were continuing to stay on at the hospital, for no other reason than that there was no home for them to go to, which I think is a reflection upon all concerned. In one or two other cases the patients were very old indeed. One lady was 99; obviously it was impossible to move her.
I suggest that there should be more attention given to the provision of halfway houses where assistance could be given to those who have no business to be in hospital at all. That would work in well with the geriatric clinics mentioned by the hon. Member for Barking (Mr. Hastings). We have lagged behind since the war, not so much in the provision of hospital accommodation, which is the least important part, but in the provision of places where such people could obtain lighter nursing and care.
There is one other kind of institution which needs developing, though I know that something is being done on these lines by various voluntary bodies. That is a home or—I hate the word "institution"—let us say a home, to which those families who have elderly relatives could send them to be looked after while the family had a holiday.


That would help many families and encourage them to keep their relatives at home and not "dump" them in hospitals or institutions.
I was told of the case of a school teacher who works very hard and at the same time maintains two elderly relatives at home. She has not had a holiday for nine years—

It being Four o'clock, the Debate stood adjourned.

INDUSTRIAL DEVELOPMENT, SEAHAM HARBOUR

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. R. Allan.]

4.0 p.m.

Mr. William Blyton: I raise this subject now because of its great importance to my constituents in Seaham Harbour and because of the strong sense of dissatisfaction and injustice which is felt by all in that area. Seaham Harbour is a large mining area. To all intents and purposes it is a one-industry town. It is this fact which has militated against industrialists being attracted to the area, as has been found time and time again by the local council in its efforts to persuade other industries to come into it. The only work which is really available for boys is mining, and nothing is available for females.
The strong sense of grievance which is felt at this state of affairs is further aggravated by the knowledge that in other parts of the country new Government factories are being built. It is felt that Seaham is being left out in the cold. Because of the attitude of the Board of Trade to the firm of Messrs. Barron Ltd., which is prepared to go to Seaham, the conviction is growing among my constituents that, despite all the sympathy which has been expressed in the matter, the Board of Trade wants to dissuade industry from entering the Seaham area. Whether or not that is correct, it is true that beyond the clearance of a derelict industrial site nothing whatever has been achieved by the Board of Trade in the bringing of new industries to Seaham.
Now, at last, when a very reputable firm is keen and anxious to come to Seaham, it is told that because it has proved to be a highly satisfactory tenant of a Government-financed factory at Team Valley, it cannot have a Government-financed factory at Seaham. At the same time, this firm has been offered a factory at Jarrow or Sunderland, to neither of which places it desires to go, for reasons that I shall give. I had always been under the impression that the existence of the Distribution of Industry Act was to encourage industrial developments in areas scheduled as Development Areas, but it seems that I have been wrong in this belief.
The history of this matter briefly is that this firm cannot get labour in Gateshead or Leeds. It contacted the Board of Trade and the Ministry of Supply in their North Regional Offices on 29th January, 1954. It stated that it could obtain all the labour it needed at Seaham. At the same time, the firm was asked to consider occupying a Government-financed factory on the Jarrow Bede Estate. The firm received confirmation about the labour situation in a letter dated 27th February, 1954, from the Ministry of Labour.
I do not think that there will be any dispute that over 300 women are unemployed in the area, and that the influx of school-leavers each year is sufficient to maintain the required labour force. On 24th February of last year this firm wrote to the North-East Trading Association, asking for a factory in order to expand its productive capacity, due to the decline in its labour force which had taken place in Leeds and Gateshead. The association supported the firm's application, in a letter dated 26th February, 1954.
The Board of Trade, in a letter dated 26th April, 1954, asked a number of questions, of which the two important ones were these. Why was the firm unable to build at Seaham? Second, why did it feel that the existing Government factory in Sunderland should not be considered? I should like the Minister to note that Government factories were being offered at Sunderland or Jarrow, but the Department told the firm that if it wanted to go to Seaham it must build itself. Why this discrimination against Seaham has taken place is what my constituents want to know.
This firm has an output of over £2 million per annum in value, and the capacity to which its factories are working is 70 per cent. in the case of Leeds and 80 per cent. in the Team Valley, which is due entirely to the inadequacy of labour in those two areas. During the recession of 1951–52, the firm maintained its personnel, in spite of the falling off in demand at that time. Had it not done that, the personnel position would have been much worse.
The next question asked by the Department was why the firm could not build. As the Minister knows, the firm has its own buildings in Leeds, and could employ between 200 and 300 more people if it could get the labour. Sufficient of its capital consistent with the size of the business is tied up in new buildings. It was also pointed out that any further capital outlay by the firm on the provision of buildings would prejudice its efficiency and profit-earning capacity.
I am given to understand that the factories offered to this firm have now been taken over by other firms in Sunderland. The reason this firm did not want to go to Sunderland is that there was no confidence in the availability of labour over a long-term period; and, second, it was felt that the Sunderland factory which was offered was more suitable to a firm with greater requirements for factory space and labour.
Why did the firm desire to go to Seaham? One reason was that there is no factory at all in that area which employs female labour. Further, there is sufficient labour there to meet its requirements, and there is available a good annual intake of children leaving school, which is an important factor in an industry like this. Also, Seaham is a Development Area, and the project would have been of great value to Seaham as well as the company, because it has given an undertaking that it can maintain a medium-sized unit for many years to come.
The first has now a hall in Seaham in which it is training young people as key workers, and I have great admiration for it, because, in spite of the heartbreaking difficulties which the Board of Trade created by the refusal of this factory, this firm is still continuing with this venture.
The decision was taken by the Department in May, 1954, that the Board of Trade would not build a factory at Seaham. What was the reason for this refusal? The main reason was that the firm was a tenant of the North-East Trading Association, and that in the opinion of the Board of Trade sufficient capital had been invested on its behalf. It seems to me that had this firm not been on the trading estate at Gateshead the Seaham Harbour project would have been considered. The firm was told that it should build its own factory, the Board of Trade completely ignoring how strained were the liquid resources of the company, a fact of which it was fully aware.
To my mind, these arguments are unrealistic. If the Board of Trade believed that, then why did it offer the company a Government factory at Sunderland and one at Jarrow, the one at Sunderland being much larger than it required? It is this history which has disgusted everyone in my area. This firm has been prejudiced, and no satisfaction has arisen from the fact that it has been a tenant on the Team Valley Estate since it first started in the late twenties. The fact that the firm has been a good tenant has prejudiced the Seaham Harbour project.
On 16th September last, I, together with others, met the Minister, and I thank him for meeting us in a most courteous way. But the Board of Trade did not alter its decision as a result of that meeting.
Mr. Sadler Forster recently stated that £2 million will be spent on development in the North-East, and he expressed great hopes about the future of the North-East. Is future capital outlay to be spent on speculative industry rather than on an essential one like that designed to come to Seaham? I have a very high regard for Mr. Sadler Forster. He has done great work for the North-East, for which we are all very grateful.
The North-East Trading Association is in favour of this project, and the only opposition to it comes from the Minister's Department. There is no opposition to it from the North. The idea seems to prevail in the Board of Trade that women and girls in mining villages around Sunderland ought to work in Sunderland, which is five mites away. It is wrong, in a large area like Seaham, Ryhope,


Dawdon, and Murton, that when a firm is willing to come there, miners' wives and daughters should have to go all the way to Sunderland when work can be provided for them in their own area.
I know that the Minister will say that the Board of Trade is not dissuading the firm from going to Seaham, but, in my opinion, it is. It has refused to build a factory with Government finance at Seaham, but has offered a Government-financed factory in Sunderland and Jarrow. In my opinion, that is tantamount to persuading the firm to leave Seaham alone and to go elsewhere.
As I have said, there is no Government factory in this area. The factory which we seek would give employment to 300 women in this large mining area. Surely, large mining townships are not to be ignored in the interest of towns like Sunderland. Here is a firm of high repute which is keen to come to us, but which cannot build a factory for itself for the reasons I have given. The factory would be a boon to the wives and daughters of miners in this mining district.
The council has come to regard Seaham as a forgotten town. It has heard nothing from the Board of Trade, and the Board of Trade has said "No" to this reputable firm as far as the factory is concerned. Seaham thinks that it has had a raw deal, and, on the facts, I am inclined to agree with it.
I trust that the Minister will give Seaham real hope. The Board's attitude seems to be, "Abandon hope, all ye who enter Seaham, of getting any help from the Board of Trade." I ask that the capital expenditure programme for the North-East should at least give Seaham a break. If not, we can come to no other conclusion than that Seaham is to be condemned to be a Development Area, just a mining area, to which no one is to be encouraged to come, and that women are to be forced to travel outside the area to work. I ask the Minister to reconsider the matter and give Seaham a ray of hope.

4.16 p.m.

Lieut.-Colonel Marcus Lipton: We are anxious to hear what the Minister has to say. I intervene because I happen to know this part of the County of Durham very well indeed. I spent most of my early life in Sunder-

land. In Seaham and Seaham Harbour there is absolutely no industry in which the women can engage. If they want to work they have to travel to Sunderland or to make a more awkward journey to the Team Valley Estate or to Jarrow. It seems unnecessary that young women and girls leaving school should be compelled to travel these long and inconvenient distances, sometimes at a period of the year when communication is difficult, when firms are willing to provide useful and productive occupation in the place where they reside.
It is most important that there should be something other than mining in the mining areas, to provide, particularly for the womenfolk, an opportunity of earning a livelihood. It is undesirable that they should be compelled to travel long distances, putting an extra burden on transport and getting in the way of people who, for other reasons, have to go to Sunderland, the Team Valley, Jarrow and elsewhere. I hope that the Board of Trade will give sympathetic consideration to the plea put forward by my hon. Friend for the provision of employment facilities in the Seaham district.

4.18 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss): The hon. Member for Houghton-le-Spring (Mr. Blyton) referred in his speech to a deputation from the local authority which he brought to see me in September, 1954. I then tried to explain to him some of the matters which puzzled him and the deputation.
My difficulty in answering him further today will be appreciated by him and by the House. The dealings between the Board of Trade and an individual applicant are confidential. It has therefore been the practice of previous Governments and of ourselves not to discuss or disclose the particulars of an individual application. I am sure the House will realise why, in the interests of the Development Areas themselves, we must strictly observe that policy.
I can, however, remove some of the misunderstandings which still persist. Let me deal at once with the suggestion that we are dissuading anybody from going to Seaham. The Board of Trade have statutory powers to dissuade, should they wish to do so, by the refusal of an industrial development certificate under the


Town and Country Planning Act, 1947. There has been no suggestion of doing anything of this kind in the case of Seaham. No application for an industrial development certificate has been refused. The only question that has arisen is whether a particular request for a new Government financed factory is one which should have been granted. That is a quite different question.
Perhaps I can also dispose of two matters mentioned by the hon. Member, who put the case of his constituency with characteristic ability and force. He said that there might be a question of a company not having sufficient funds available to build its own factory. That would not necessarily be a reason for the Government erecting a factory. He will find that the 1945 Distribution of Industry Act contains a provision by which an applicant in such a position can apply to the Development Areas Treasury Advisory Committee for a loan. Factory building by the Government is not therefore the sole solution.
Then the hon. Member said, "But the attention of the applicants was called to some empty factories in Sunderland." That was because those factories were then empty. I am glad to say that they have since been disposed of, as the House knows from a previous debate which was initiated not long ago by the hon. Member for Sunderland, North (Mr. Willey).
Having said that, let me come to the point on which I am in complete agreement with the hon. Member. The Board of Trade share his desire for an industry in Seaham that would give more employment to women and girls. There is no difference between us on that point. We shall certainly not discourage it. It must not be assumed from the fact that a request for a Government-financed factory was not granted that we are unsympathetic to the desire that there should be more industry to give employment to women in Seaham. We agree with the hon. Member about that need. The total quantity of the unemployed may not be very high, but the proportion of women who desire employment compared to those employed is high in comparison with the figures for many areas.
Our funds for providing Government-financed factories are inevitably limited. It must be the Board of Trade policy

under any Government to make the best possible use of the funds available for new factories in the interests of the Development Area as a whole.
We cannot possibly guarantee to build a factory in every part. In this case, while we would welcome a factory such as I have described, it would be quite wrong to treat Seaham completely in isolation. It must be considered as part of Wearside. I realise to the full that we all prefer to work, where possible, near our homes, but Seaham is not the only place in the country where men and women have to travel some distance to their work. As long as there is a pressing need for more jobs for Seaham's women and girls, we shall certainly be prepared to consider on its merits any application that may be made to us for help under the Distribution of Industry Acts. We shall, of course, have regard to the figures at the time of the application, and the figures may be improved as a result of further employment for women and girls apart altogether from a new Government-financed factory.
We have, of course, no power to direct any industry to go anywhere, but we are conscious of the needs of this Development Area as a whole and not least of Seaham. It is not true that, because we pointed out that there were at the time of a particular application some vacant factories in Sunderland, out decision not to build a new factory in Seaham was wrong. Nor, as I explained earlier, if the difficulty is the difficulty of finance, does it necessarily follow that the building of a factory is the right remedy under the statutes. However, I prefer to conclude with the main point which I made—my point of agreement with the hon. Member for Houghton-le-Spring rather than with the points of difference.
My point of agreement with him is the need, which the Board of Trade recognise as much as he does, for further employment if possible for women and girls at Seaham. For the reasons which I have stated, I cannot discuss in greater detail the fate of a particular application. I know that the last thing the hon. Member would want me to do would be to disclose anything which by custom the Board of Trade, under all Governments, treats as confidential as between the Board and applicants. I am not, of course, saying anything whatsoever


against the company whose name the hon. Member mentioned. Nothing against the company is to be deduced from the fact that its application for help under the Acts was not granted.
I share the hon. Member's hope for some project which will diminish the unemployment among women and girls in the area. He is quite right in saying that the men are almost entirely provided for by a single industry. He is also quite right in saying, as did the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton), that there is a lack in

Seaham itself of work for women and girls, but I assure the hon. Member that the fact that the Board of Trade acted, as I think quite rightly, in regard to this application does not mean any lack of sympathy on the question of the general need for new industry in his constituency giving employment to women and girls.

The Question having been proposed at Four o'clock, and the Debate having been continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Four o'clock.